by Michael Snyder, The Economic Collapse Blog:
If they are actually telling us that a recession is coming this time around, how bad is it going to be? In 2008, officials kept assuring us over and over again that there wouldn’t be a recession, and then we plunged into the greatest economic downturn since the Great Depression of the 1930s. But here in 2023, what is coming is so obvious that nobody can deny what is happening. The economy is already starting to come apart at the seams all around us, and the “experts” at the Federal Reserve openly acknowledge that they are making things even worse by hiking interest rates. Pretty much everyone agrees that rougher times are ahead of us, and “a probability model from the New York Federal Reserve” is now projecting that there is a 68.2 percent chance that there will be a recession within the next 12 months…
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The odds that the United States will fall into a recession at some point over the next 12 months have risen to a 40-year high, according to a probability model from the New York Federal Reserve.
The probability that the country will enter a recession within the next year has risen to 68.2 percent, according to the New York Fed, which is the highest level since 1982.
The Fed’s recession risk indicator is now greater than it was in November 2007, not long before the subprime crisis, when it stood at 40 percent.
This is the highest that figure has been in more than 40 years.
Just think about that for a moment.
The recession of the early 1980s was a real whopper, and if you were alive at that time you probably still have very painful memories of it.
Are we about to experience something similar?
Larry Summers says that he also believes that we probably have about a 70 percent chance of a recession within the next 12 months…
Former Treasury Secretary Larry Summers has also expressed his view that the odds of a downturn are “probably about 70 percent.”
“The chance that a recession will have begun this year in the U.S. over the next 12 months is probably about 70 percent,” Summers said in a recent interview with Foreign Policy. “As I put together the lags associated with monetary policy, the credit crunch risks, the need for continuing action around inflation, the risk of geopolitical or other shocks affecting commodities, 70 percent would be the range that I would be in.”
So many pundits are very negative about the next 12 months, but we certainly don’t have to wait for bad economic news, because it is happening all around us right now.
In fact, the New York Fed’s Empire State business conditions index just fell more than 42 points in a single month…
After an unexpected surge into growth territory in April, the New York Fed’s Empire State business conditions index plunged 42.6 points in May to minus 31.8.
Economists had forecast a milder slump to negative two.
Readings below zero indicate worsening conditions. The May decline is the sharpest on record apart from the initial lockdown months of the pandemic.
Read that last sentence again.
Not even when nearly the entire country was locked down did we see a drop of this magnitude.
And this comes at a time when consumers, small businesses, and large businesses are all struggling.
On Monday, we learned that total consumer debt in the U.S. has just reached a brand new all-time record high…
Total consumer debt hit a fresh new high in the first quarter of 2023, pushing past $17 trillion even amid a sharp pullback in home borrowing.
The total for borrowing across all categories hit $17.05 trillion, an increase of nearly $150 billion, or 0.9% during the January-to-March period, the New York Federal Reserve reported Monday. That took total indebtedness up about $2.9 trillion from the pre-Covid period ended in 2019.
Of course interest rates are moving higher at the same time.
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