Figure 1: Expected Probability of Recession 10-year-3-month Range Spread (blue), 10-year-2-year Range Spread (tan), 10-year-3-month Range Spread Powered by FCI, Foreign Term Spread (green). All models are rated over the range 1986M01-2022M11. The National Bureau of Economic Research has peak-to-trough recession dates highlighted in grey. Magenta shading indicates a putative stagnation in 2022H1. Red dashed line with a probability of 50%. Source: Author accounts, NBER.
A description of possible models is included in this post. Note the lower estimated probabilities of a recession attributed to the 2022H1 period, which contradict reader Stephen Kobitz’s assertion. On the other hand, a recession that occurs sometime in 2023H2 is not out of the question.