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Odds of a Recession - 3/22/16

U.S. financial markets settled down in February and March after a rough beginning to the New Year.  In response, many economists have begun to reduce the odds they place on a recession over the next twelve months.  According to a recent Wall Street Journal survey of business, financial and academic economists, the average estimate of the odds of a recession in the next twelve months has fallen to twenty percent. 

Still, the odds of recession are double what they were last summer.  Nearly three quarters of surveyed economists participating in the survey view economic risks presently weighted to the downside.  Among the risks are an excessively strong U.S. dollar, sluggish foreign growth and tightening financial conditions. 

The most pessimistic economist in the survey, Thomas Costerg of Standard Chartered bank, places the odds of a U.S. recession over the next twelve months at about fifty percent.  On the opposite end of the spectrum, economist Allen Sinai of Decision Economics sees no risk of recession at all. 

Although the perceived risk of recession is higher than it was during the summer of twenty fourteen, current risks remain lower than during some recent recession scares, including in mid-2011 when the U.S. government nearly defaulted on its debt.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.