Intrade market indicates a 68.9% chance of recession in 2008

Trading on the Intrade Prediction Market indicates a 68.9% chance (up from 67.0% last week) of a U.S. recession in 2008.

People are not only quite worried that a recession is possible, but they consider it to solidly be the likely scenario. Nonetheless, conviction is still only "medium."

As a result of the deterioration of the ECRL Weekly Leading Index, I am upping my personal chance of a recession from 25% to 35%.

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.

-- Jack Krupansky