A Federal Reserve forecasting tool currently puts the odds of a recession at 51.84% in the next 12 months. That may sound insignificant, but the forecasting tool in question has only given a reading above 50% a few times since 1960 — the last time was four decades ago — and each event either preceded or occurred during a recession.
The chart below shows the recession probability implied by the Fed’s forecasting tool dating back to 1960. Areas shaded gray have been classified as recessions by the National Bureau of Economic Research. Notice that spikes in the recession probability curve have correlated closely with actual recessions.
US Recession Probability data by YCharts
No forecasting tool is perfect, but it would be historically unprecedented if the U.S. economy was not in a recession one year from today, according to the Federal Reserve Bank of St. Louis.
