The countdown officially started in December of last year, with a few headlines listing “2 signs.” In February -“3 indicators”, March - “6 observances”, May - “16 warnings” and the most recent update this week, featured a series of graphs, painting a picture worth a minimum of a thousand words. In the world of weather predicting, tornadoes are much more difficult than hurricanes. Volatile storm systems just “pop up” literally within hours or minutes, producing destructive tornadoes. When it comes to hurricanes, the ocean starts sending warning signals several days in advance and predictability ranges start at five days for the projected path in relationship to landfall.
An Almost Certain Storm is Brewing:
When weather experts mention the word “hurricane” people begin frantically shopping, boarding, filling sandbags and preparing themselves for many serious options, sometimes including evacuation. Following that pattern of logic, it is difficult to comprehend why, when JP Morgan released their projections this week for the percentage of a recession occurring within the next twelve months, panic was not observed. If the percentage of perceived certainty of a recession only rose 1% or 2% or maybe even 5% during the last 30 calendar days, it might not have been a serious concern. JP Morgan increased the projected percentage of a recession starting sometime within the next 12 months by a whopping 20%. Raising their forecast from 30% to 36% of a recession happening within the next 12 months is not just a big deal, it is time to start battening down the financial hatches.
If a doctor told a patient, “we made a slight error and your chances of surviving 1 year are actually 60% as opposed to 80%”, would that cause a reason for concern? At the very least it might significantly change future travel plans. Doctors for the the terminally ill patient, have probably not been explaining that their health is at an all-time high and the white blood count, (unemployment), is at the healthiest level it has been for 7 years. Our nation’s leadership has been touting our great blood pressure(stock market performance), numbers for a long time as well. When it comes to who should be trusted, the writer from JP Morgan could be closely compared to the attending nurse taking one’s vital signs and our President would equate to the Attorney General of the United States.
Hospital Records May be a “Tiny” bit Tainted:
The tragic part about the JP Morgan prediction, stems from it being based on the assumption that the Chief of Staff for the hospital is preserving some semblance of patient record integrity. No qualified financial analysts at JP Morgan would even imagine that several members of the medical staff were sneaking in at night with instructions to conduct classified patient record “altering parties” and unwanted recorded media “deletion bashes.”(previous limited to the State Department)
Sounding the Storm Warning Sirens and Responding to the Code Blue:
JP Morgan’s assessment of the risk for recession to begin within 12 months, which has now been elevated during the most recent 30 days by 20%, is significantly impacted by the published unemployment number of 4.7%. We might confirm the relevance of this fact due to the explanation that “unemployment data is recognized as a leading indicator” directly underneath the graph explaining the projection. Maybe out of sheer concern for the financial well-being of our families, we could assume, that since many experts believe unemployment could realistically be 9.8% or higher, we might want to leave a little “wiggle room.” If we adjust that estimate up to meet in the middle between two perceived realities, (4.7%+9.8%) / 2, we arrive on 7.25%. A little over 7% may well be a very conservative number, based on the historical performance of the current administration for honest and accurate reporting. Our reason for serious concern needs to come from the JP Morgan quote, which is immediately beneath the recession prediction graph. The graph, as we indicated earlier was significantly influenced by the official 4.7% unemployment figure. To quote JP Morgan using the first words which appear beneath the graphical illustration: “the probability of a recession occurring in the next 12 months has never been higher.” Knowing what we know as citizens about the historical trend of government to understate “economic doom” indicators, we should react proportionally to the situation. It is time to sound the sirens, resuscitate the patient, batten down the hatches, dial 911 or whatever drastic means necessary to prepare for a sudden and inevitable recession.