Next Recession Projection
Description
The purpose of this idea is, based on past recessions, to try to predict when the next one could occur. Many factors could influence the future, but for now, we will focus on two of the most known indicators to predict a recession, the Yield Curve Inversion(ICV) and the Sahm Rule Recession Indicator. Usually, when the ICV stays below 0 for a period of time, it indicates that a recession will occur in the future. As can be seen, this indicator predicted the last three recessions: '90, '00, and '08. The ’20 recession is excluded. Moreover, the SPX chart is added to reference where the markets could go.
The projection is indicated with pink color.
Yield Curve Inversion Period
The ICV period ranges between the time when the ICV went below 0% and the time of the last touch to 0%. The average for the last three periods is 425D. We are in the current period for 183D. Usually, while the ICV is below 0%, there is a high chance that the FED will not increase the interest rate or even pivot, as seen in that #1 and #2 periods.
#1: 455D
#2: 304D
#3: 516D
Projected:
#4: 426D
SPX
While the ICV is below 0%, the SPX moved on sideways or even upwards.
US Interest Rate
The average for the last three periods is 253D.
#1: 120D
#2: 214D
#3: 426D
Projected:
#4: 243D
Sahm Rule Recession Indicator
According to this indicator, once the ICV touches the last time 0%, there is a delay until the effects of a recession are seen. The average for the last three periods is 244D.
#1: 214D
#2: 213D
#3: 307D
Projected:
#4: 244D
Conclusion
A recession could start at the beginning of 2024. This would also coincide with the Presidential Cycle theory, where the third year of the US presidential mandate is more bullish than bearish, and the fourth year is more bearish than bullish.
Please keep in mind that this is purely speculation based on previous data, and there are many other factors that can change the outcome.
The purpose of this idea is, based on past recessions, to try to predict when the next one could occur. Many factors could influence the future, but for now, we will focus on two of the most known indicators to predict a recession, the Yield Curve Inversion(ICV) and the Sahm Rule Recession Indicator. Usually, when the ICV stays below 0 for a period of time, it indicates that a recession will occur in the future. As can be seen, this indicator predicted the last three recessions: '90, '00, and '08. The ’20 recession is excluded. Moreover, the SPX chart is added to reference where the markets could go.
The projection is indicated with pink color.
Yield Curve Inversion Period
The ICV period ranges between the time when the ICV went below 0% and the time of the last touch to 0%. The average for the last three periods is 425D. We are in the current period for 183D. Usually, while the ICV is below 0%, there is a high chance that the FED will not increase the interest rate or even pivot, as seen in that #1 and #2 periods.
#1: 455D
#2: 304D
#3: 516D
Projected:
#4: 426D
SPX
While the ICV is below 0%, the SPX moved on sideways or even upwards.
US Interest Rate
The average for the last three periods is 253D.
#1: 120D
#2: 214D
#3: 426D
Projected:
#4: 243D
Sahm Rule Recession Indicator
According to this indicator, once the ICV touches the last time 0%, there is a delay until the effects of a recession are seen. The average for the last three periods is 244D.
#1: 214D
#2: 213D
#3: 307D
Projected:
#4: 244D
Conclusion
A recession could start at the beginning of 2024. This would also coincide with the Presidential Cycle theory, where the third year of the US presidential mandate is more bullish than bearish, and the fourth year is more bearish than bullish.
Please keep in mind that this is purely speculation based on previous data, and there are many other factors that can change the outcome.
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