US: A one in three chance of recession - or a two in three chance of no recession?

Last September, we estimated the chances of a US recession occurring in 2016 as one in three. This prediction was less bold than it sounds since recessions have occurred, on average, about once every five years in US history.

Also, it has been seven years since the last recession so, in a sense, we are 'due'. With equity and credit markets selling off early this year, the recession forecast has become correspondingly more popular among some market pundits. Saying there is a one in three chance of recession is simply a provocative way of saying there is a two in three chance of no recession this year. In fact, some of the leading economic indicators we track, which were weak in autumn, are showing signs of improvement.  In particular, railroad car loadings and consumer spending have looked healthier in rece...