Our firm has a long history with Russell Investments , and my personal relationship with the firm goes back all the way to 1983, so I have a great deal of interest in their research.
Michael Dueker is a senior portfolio strategist at Russell and has an interesting model for predicting recessions which he discusses at Econbrowser.
Bottom line:
To get a handle on how unprecedented it would be for the economy to avoid recession in 2008, it is useful to look at the business cycle index produced by the Qual VAR model. The fourth chart shows the business cycle index for the entire sample period with forecasts for 2008 through 2011. The chart shows that the business cycle index has never dipped as close to zero as it is projected to do in 2008 without a recession. For this reason, it appears unlikely that the economy will escape the current slowdown without a recession.
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