What are the Odds of Recession in USA Now (January 2008). Calculated Here.

Many people are concerned about the slowing economy and a possible US Recession.

Can we calculate the odds of a recession?

There are many models, but one of them is by the Federal Reserve Board's Jonathan Wright. It takes three items into consideration:

1. 10 Year Treasury Bond Yield
   
2. 3 Month Treasury Bond Yield
   
3. Federal Funds Rate
   

More information on this available here

Odds of Recession as of January 2, 2008

Current Numbers:

1. 10 Year Treasury Bond Yield: 3.91% (50 Day Moving Average: 4.17%)
   
2. 3 Month Treasury Bond Yield: 3.26% (50 Day Moving Average: 3.34%)
   
3. Federal Funds Rate: 4.25%
   

If we calculate using the current yields, the Odds of Recession as of January 2, 2008 over the next 12 months is 12%.

If we calculate using the 50 day moving average of the yields, the Odds of Recession as of January 2, 2008 over the next 12 months is 9.5%.

The Odds of Recession has gone down since we last calculated the odds on September 1, 2007 (23% odds of recession over the next 12 months from then).