by Bill O’Grady & Mark Keller | PDF

Summary—High Probability of Recession:

1. The economy is facing three simultaneous problems:
   1. A public health crisis—COVID-19 and the economic impact of containing it;
   2. An oil price war and a regional economic slump;
   3. Rapidly rising financial stress caused by (a) and (b) along with underlying unresolved issues.
2. We estimate the odds of recession are now 80%, although there is a slim chance the economy avoids a recession.
   1. There is very little economic data to confirm the economic slump, but the anecdotal evidence is near overwhelming;
   2. Given the timing of economic reporting, clear evidence of a downturn won’t be available for several weeks;
   3. This report will update our thoughts on how the next few months will unfold.
3. The content of this report:
   1. An overview of how recessions look compared to expansions;
   2. A discussion of the three threats the expansion faces;
   3. The market impact of these three threats.

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