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The probability of a recession rises immediately prior to a recession. When the recession occurs, the probability drops immediately back down below the threshol
by debt 8y ago
The probability of a recession rises immediately prior to a recession. When the recession occurs, the probability drops immediately back down below the threshold; as the probability of a back-to-back recession is very low and the conditions that caused the recession immediately change.
So the critical threshold is saying "at any point beyond this line, as conditions remain the same, bad things may happen at a very accelerated rate"
I think that's why the lines jump from .24 or .6 to 1.0(recession) and then back below .24.
So as far as I can tell, they're not saying a recession is guaranteed if the probability increases beyond the critical threshold, but are instead saying the probability of a recession increases more quickly up into the point of an actual recession than our ability to reliably predict and update the probabilities that would predict said recession.
but idk
- Bromskloss 8y ago> I think that's why the lines jump from .24 or .6 to 1.0(recession) and then back below .24. None of the curves ever go to 1. The main curve ("spread only") never even reaches 0.4. > So as far as I can tell, they're not saying a recession is guaranteed if the probability increases beyond the critical threshold They certainly shouldn't be saying that, since the curve being at that level means precisely that the probability of recession is 0.24, not 1.