Article Suggests U.S. Recession Likely Before 2020 Election
A statistical study of time between U.S. recessions suggests estimates that the probability of a recession before 2020 election is about 80%.
By: Curtis Miller's Personal Website
Using the time between U.S. economic recessions since the Great Depression as a data set, Curtis Miller found that a Weibull distribution describes the distribution of these duration between recessions well, and estimated the shape and scale parameters of the distribution to be 2.00 and 5.60, respectively.
Based on these estimates, he computed that the probability of a recession before 2020 was around 80%. He also estimated that there is a 25% chance of a recession before the 2018 midterm election in November.
He then used bootstrap techniques to estimate a 95% confidence interval for each of these numbers. The confidence interval for the probability of a recession before the 2018 midterm election is (17%, 62%), while the confidence interval for the 2020 number is (63%, 100%).
Based on these intervals, while the chance of a recession before the 2018 election is highly uncertain, the probability of a recession before the 2020 election seems high.
It has been almost nine years since the Great Recession ended in 2009, and only one other period since the Great Depression saw economic growth lasting longer; this increases the odds of a recession in the upcoming years.
Curtis Miller suggests that given the Republican Party and Donald Trump's unpopularity even in good economic times, Republican candidates could face even bigger problems in upcoming years as the economy will likely take a downturn. He posits that it's unlikely Donald Trump would win an election in 2020 if the economy were to change course.
The article is available on Curtis Miller's Personal Website at this URL: https://ntguardian.wordpress.com/