Recession Alert – Not

Everyone automatically thinks notification of a recession is a bad thing for the stock market. I have seen some research that at best it can provide a lead indicator with about a year lag. I am keen to do some of my own backtesting on this and ignore statistical tests, expect to see more on this topic on the blog. Last week Japan went into recession and the markets are flying so its important to ignore the constant babble about recession.

In this chart we see the Chicago National Activity index stating things are in the average zone. This indicator has predicted every recession since 1970 except for one. Like Shania Twain, “that don’t impress me much”.

recesion alerts chicago

 

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