Goldman Sachs Model Shows 31% Chance of Recession in Next 9 Quarters

Since the financial crisis, the economy has never been called robust, but it may be in the longest expansion on record, with a couple more years to go.

Goldman Sachs economists said, in a recent note, that their model shows an increased, 31 percent chance for a U.S. recession in the next nine quarters. That number is rising. But it’s a good news, bad news story, and the good news is there is now a two-thirds chance that the recovery will be the longest on record.

“The likelihood that the expansion will break the prior record is consistent with our long-standing view that the combination of a deep recession and an initially slow recovery has set us up for an unusually long cycle,” they wrote.



The current expansion has already lasted 95 months, now third-longest in US history in 33 business cycles going back to 1854, the economists said.

“Only the expansions from March 1991 to March 2001 [120 months] and from February 1961 to December 1969 [106 months] were longer,” they wrote.

The Goldman economists also say the medium term risk of a recession is rising, “mainly because the economy is at full employment and still growing above trend.” They define a recession as a quarter of negative growth.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza