By The Financial District
Dec 14, 20231 min
The Federal Reserve Bank of New York's recession probability indicator (RPI) has been notably successful over the long run at forecasting the US economy and stock market, according to Sean Williams's report for Motley Fool.
Currently, the NY Fed's tool indicates a 51.84% chance of a US recession by November 2024.
The RPI measures the spread between 10-year Treasury bonds and three-month Treasury bills to gauge the likelihood of a US recession within the next 12 months.
Currently, the NY Fed's tool indicates a 51.84% chance of a US recession by November 2024. While this is down from a peak probability of over 70% a few months ago, it remains higher than any point in the past 40 years.
The RPI has been a reliable predictor, with a track record of signaling every recession since the end of World War II. A reading of at least a 32% probability in the Fed's predictive tool has consistently preceded a US recession since 1966.