MIT Study: There Is A 70% Chance Of A Recession In The Next 6-Months


Researchers created a recession indicator and announced that there's a 70% chance for recession in the coming months.

New research from the MIT Sloan School of Management and State Street Associates announced that there’s a 70 percent chance that a recession will hit in the next six months, according to CNBC.

The researchers created an index consisting of four factors and then used the Mahalanobis distance -- a measure initially used to examine human skulls -- to determine how current market conditions compare to past recessions. 

“The Mahalanobis distance was originally conceived to measure the statistical similarity of the values of a set of dimensions for a given skull to the average values of those dimensions for a chosen group of skulls,” the researchers explained. 

It measures the distance between a point and a certain distribution.

The researchers analyzed four market factors -- industrial production, nonfarm payrolls, stock market return, and the slope of the yield curve -- each month and measured how the current relationship between the four components compared to historical readings. 

According to the researchers, the index was a reliable recession indicator since it increased leading up to every past recession. Looking at data back to 1916, they found that when the index hit 70 percent, the likelihood of a recession in the next six months rose to 70 percent. 

As of November 2019, the index sat at 76 percent. 

Read more.

Comments (1)
No. 1-1
Roy Haines
Roy Haines

I think that they are right and most likely everything will end just like that. We have long been observing the trend that learning is becoming more difficult, students are more and more immersed in problems with payment, and therefore I was glad when I found a service that can help them solve their problems with school and complex projects. Although this could slightly ease their burden.

U.S. & Global News