Why economists are starting to use the ‘R’ word again – FINANCIAL NEWS-ecozik.com
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Why economists are starting to use the ‘R’ word again

The infamous bumper sticker of the 80s' recession could easily apply to today.

Big stock exchange declines in many cases are lead indicators for recession, and global markets are heading to their last week of trading for the month with the risk of seeing certainly one of their biggest ever January declines.

Despite a large bounce in markets Friday, which saw the S&P 500 rise two percent, fear is in the air. Bank of America Merrill Lynch economists said within an update Friday they now see a 20 percent chance that the U.S. economy will slip into a recession this season, up from the 15 percent chance they predicted in December.

The rising possibility of recession is a result of three indicators which have turned negative in recent months: Industrial production, corporate profits and also the U.S. stock market are sharply down, as well as in past decades, a uniform drop of all three have tended to signal economic contraction.

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