We thought — or at least hoped — that one of the casualties of the Great Recession was the practice among economists to make extremely precise predictions about anything.
Well, economists are always going to make predictions, but you’d think that comments like “We see a 24.542786% chance of a dip in housing” would go by the wayside.
ZeroHedge picks up a rosy report from Goldman Sachs economist Andrew Tilton who predicts a 1.6% chance of a double-dip.
More surprisingly, the model also shows a very low probability (1.6%) that the economy will be in recession six months from now. Why so low? The aforementioned labour market variables are one reason, but another important one is the positively sloped yield curve. As the yield curve embeds expectations of future Fed policy, a flat or negatively sloped curve is a sign that the market sees Fed easing as likely—a classic sign of a slowing economy.
Alright, to be fair, he did only go to one decimal point. But still.