Saturday, June 9, 2012

Recession Prediction: The Supporting Evidence

In an earlier post, I predicted that the next recession will hit on or before October 2014. They say it is a fool's game to predict such a thing, but I took a shot anyway. Why not?

I now offer supporting evidence to back my prediction.

Note that recessions generally come 1-2 years after the initial claims data reaches the bottom. So, let's zoom in on this most recent expansion and tack on some trend lines.

Click to enlarge.

We're coming in very steep. If history is a guide, the exponential decay trend will fail at some point. It always does. June 2013 appears to be the failure target. An October 2014 recession prediction (1-2 years later) is therefore consistent with the initial claims data. I see no reason to alter my prediction.

If this prediction has any validity, does this mean that it is safe to invest in the stock market until the very last minute?

Click to enlarge.

If the year 2000 is any indicator, probably not. This brings me back to one of my favorite quotes.

May 21, 2008
The Slippery Slope of Hope(lessness)

As comments left for me have stated, if one must panic at least panic first.

This is not investment advice.

See Also:
Trend Line Disclaimer

Source Data:
St. Louis Fed: Custom Chart
St. Louis Fed: S&P 500

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