Odds of a Double Dip: A Sampling of Opinions. Plus, Wolfers on Twitter

(liquidlibrary)

So by now you’re hopefully aware that the stock market completely bombed today. As I type, the Dow is down more than 500 points, its worst day since December 2008. (Official day’s tally is -512.76) And just like that it seems, the recovery is over. Well it was fun while it lasted; kind of.

Our resident macro economic guru Justin Wolfers has come up for air from his Twitter experiment (follow him @justinwolfers) and sent over this interesting sample of recent opinions from a handful of economically savvy folks, all giving their odds of the economy entering another recession:

Larry Summers: “at least a 1-in-3 chance.”
Marty Feldstein: “now a 50 percent chance.”
Ryan Avent: “more likely than not.”
Justin Wolfers: “40% chance and peak was 4 months ago” and “The guacamole has spoken.”
Don Kohn, Vincent Reinhart, Brian Madigan: “between 20% and 40%.”
Matt Yglesias: “precisely 31.22%.”
Brad DeLong: “the odds now are 50-50.”
Christy Romer: “The risks have gone up…compared to where we were six months ago.”
Bob Hall: “We certainly are in a more vulnerable situation now.”
Jeff Frankel: “not necessarily enough to push the probability over one half.”
Jay Carney: “we do not believe that there is a threat there of a double-dip recession.”

Justin has had a busy day today on Twitter. Clearly, he flipped heads this morning. Here’s a sampling of what he’s been tweeting about:

Justin Wolfers
JustinWolfers Justin Wolfers
Brookings lunch table discussion: Nothing happened today, so why are financial markets moving? Do they only read the data with a lag?
Justin Wolfers
JustinWolfers Justin Wolfers
If tomorrow’s job report were a presidential debate, I’d congratulate the campaign on doing such a great job in dampening expectations.
Justin Wolfers
JustinWolfers Justin Wolfers
Gallup’s daily confidence measures in freefall. 54% rate condition as poor: http://t.co/j1kJsAE 78% say getting worse: http://t.co/5zIGdzx
Justin Wolfers
JustinWolfers Justin Wolfers
Inflation expectations coming down sharply: http://t.co/eAfBO3l
Justin Wolfers
JustinWolfers Justin Wolfers
Intrade suggests rising risks of recession–and they are using the more severe 2 negative quarters definition. http://twitpic.com/60qv4b

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  1. rationalrevolution says:

    Hidden due to low comment rating. Click here to see.

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  2. Joshua Northey says:

    “As I type, the Dow is down more than 500 points, its worst day since December 2008. (Official day’s tally is -512.76) And just like that it seems, the recovery is over. Well it was fun while it lasted; kind of.”

    The stock market doesn’t really have a lot to do with the overall economy. The stock market is about returns for investors and short term growth forecasts.

    A well functioning economy is about smart investments and long term growth. If we decided to tax corporate profits and invest those taxes in a bunch of projects which pay off in 25 years the stock market would tank right now, because business people are ignorant sheep. The in 25 years we would be talking about “an economic miracle” as though sound policy an long term planning had nothing to do with it.

    The blips and dips of the day to day sloshing of money around the country are completely irrelevant. What is relevant is that you have people creating goods and services that people need, and consuming fewer goods and services then they create. That is a healthy economy. Study some Colbert (French 17th century economist not modern satirist).

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  3. Nikki says:

    @1: Don’t you keep up with the official terminology, rationalrevolution? There’s a 40% chance that this will go down in history as a recovery-less recovery.

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  4. Ian says:

    You guys should take a look at the UK economy too. We have sovereign debt getting worse all around our ears, the banks are creaking at the seams as they lay off thousands of workers. We still have low interest rates – but as soon as they are raised a lot (loads and loads) of people will be in trouble with their finances.
    Shame you don’t have links to websites I was going to reference http://www.networkbanker.co.uk

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  5. Andres Ibanez says:

    What is a 50% chance? It’s like saying “It may or may not”. What’s the use!! Economists are no better than the local whetherman!!!

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  6. Steven Kopits says:

    We have been signaling the risk of recession since April. See here, for example: http://www.energybulletin.net/stories/2011-04-25/pick-one-spr-or-recession

    Timing was before the end of summer. Reason: When crude oil consumption has exceeded 4% of GDP, the US has fallen into recession 100% of the time. Crude oil consumption averaged 5.5% of GDP during recent months, peaking at 6% of GDP in April. Transmission time for such a shock into the economy is 30-180 days historically, creating recession expectations for sometime during the summer.

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