How to model the timing of a US recession

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There's been a fair bit of talk about a pending US recession. Much of this chatter has been fueled by simple analysis of the slope of the yield curve, which is widely viewed as a strong predictor of recession. What this analysis doesn't do, however, is provide any information on the timing of when a recession might occur. The fixed income team at Schroders have developed a 24-point model that combines a range of indicators each with a 'best-fit' of time to a recession. In this short video Stuart Dear, Deputy Head of Fixed Income at Schroders, provides an example of how their recession modelling works and explains what it is telling them right now.

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You can read further insights and analysis from Schroders Fixed Income team here


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Mike Sheahan

Recession. Recession. You guys live in hope for a disaster. We will have an end to the bull run. But a recession, crazy!

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James Marlay

I'd say that was a pretty non-alarmist commentary Mike. 6 out of 24 of their indicators isn't exactly calling a disaster. We get lots of people asking about how to measure risks so they can think about how and when they might need to make changes in their portfolios.

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Michael Hayter

The stockmarket will normally fall some time before the recession. I am more interested in that, than the timing of recession itself. Does the model help in predicting that ?

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