Intrade market indicates a 60% chance of recession in 2008

Trading on the Intrade Prediction Market indicates a 60% chance (up from 55% last week) of a U.S. recession in 2008.

In other words, people are quite worried that a recession is possible and consider it (just barely) likely, but without strong conviction.

Personally, I would still put the chances down around 25% (1 in 4.) The so-called weakness in the economy is simply not profound enough to suggest an outright recession. For example, the weekly initial unemployment claims number has remained well below 400,000 even recently, while traditionally that number tends to spike well above that 400,000 in recessionary times.

Nonetheless, the Intrade indication is probably a good proxy for overall market sentiment.

OTOH, if I were to try to synthesize the chance of recession from the overall tone of commentary, it would be about a 99% chance of recession in 2008. In other words, much of the commentary that attracts the interest of the press grossly misleads people about what the actual data suggests.

FWIW, Intrade trading current pegs Hillary at the same 60% chance of being the Democratic presidential nominee and Barack has a 40.8% chance. OTOH, Intrade showed Barack having a 67% chance of winning going into the New Hampshire election, so that just illustrates how tentative and subject to change these number really are.

-- Jack Krupansky