The odds of recession are declining substantially. At least that’s the story Intrade is telling us. Intrade is an online market that trades mostly political events, but a range of other events as well. According to the latest Intrade market data the odds of recession in 2012 have fallen to 30% from a recent high of nearly 50%.
I’ve long been saying that odds of recession are very low in 2012 for various reasons and my opinion there hasn’t changed much. I still think the balance sheet recession is likely to end in the coming couple of years and that marginal improvement in the private sector de-leveraging situation combined with high federal deficits will bolster the economy this year. It’s not enough for a strong year, but muddle through is probably about right….