Unexpectedly Intriguing!
20 September 2006

Today, the Federal Reserve's Open Market Committee left the Federal Funds Rate, the interest rate banks are charged for overnight loans, unchanged at 5.25%. Using Political Calculations' tool for reckoning the odds of a recession beginning sometime in the next 12 months, this puts the current probability of a recession at 38.7%, given the current 3-Month Treasury yield of 4.79% and the 10-Year Treasury yield of 4.73%.

Visualizing the probability of recession doesn't produce much difference from the previous chart, but here it is anyway:

Since the Fed's previous meeting, we saw a short-lived run-up in recession odds to mid-40 percent levels, which subsequently receded as inflationary factors have weakened substantially.

And that's our best thinking of where the economy is today. For a positive view of the economy, see Institutional Economics' Stephen Kirchner's excerpt of a recent report from Action Economics. For substantially more negative view of the economy, please check in to the analysis available at Nouriel Roubini's RGE Monitor (which Stephen Kirchner affectionately calls "Doomsday Cult Central"!)

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

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