These are the personal views of Thomas Lam, group chief economist at OSK Group/DMG & Partners:
The whispers of U.S. “double-dip” recession prospects have gotten louder recently. While financial indicators have deteriorated on net, data on the real economy have not pulled back as much.
Using a proprietary leading index combined with a probit-regression framework, our estimation suggests that the odds of a recession over the next six months are probably around 5% at this juncture. The recession-alert threshold is about 40% (i.e., if the probability rises beyond 40%, the risk of a recession becomes significant).
The estimated prospects of a recession over the next four quarters appear to be in the vicinity of 10% to 15%. While the chances seem to be higher as the duration lengthens, they are still not statistically significant at this point.
