2008 Recession Odds Plummet

Ever since initial readings of first quarter GDP came in at 0.6%, the odds for a recession over at Intrade have plummeted.  The Intrade contract defines a recession as two consecutive quarters of negative GDP growth.  The current price of the Recession in 2008 contract is 15, which means traders are putting the odds at 15%. 

While the unofficial definition of a recession is two consecutive quarters of negative GDP growth, it doesn't have to occur to be an official recession as defined by the NBER.  And judging by the decidedly negative comments by NBER chief Martin Feldstein, it's highly likely that there will be an official recession at some point in the near future (even though his personal comments aren't supposed to affect the NBER's calls).  Below are the returns from a Google search for "NBER Feldstein."

We don't like to get into whether or not we're in an official recession, but we do think that Mr. Feldstein should keep his personal beliefs to himself if the NBER is supposed to give an unbiased reading of an indicator that affects numerous things including sentiment.

Comments

[Retirement Investment Advisor]

That's interesting, I guess my research on recession and stock returns is a waste then...

http://investmentscientist.com/2008/01/25/