Recession Indicator at the time of the first Fed rate cut

By: Macro Strategy Team

September 13, 2024

By: Macro Strategy Team

Macro Strategy Team

The State Street “Recession is Likely” indicator's current reading is a punchy 93.2%. This stands in sharp contrast to the Bloomberg survey of economists 1-year forward probability of recession, which is currently at just 30%.

The chart shows the State Street indicator reading at the time of the first rate cut. The average for soft landings, which includes 1984, 1995 and 1998, is 18%. The latter two episodes were framed by the Greenspan Fed as “insurance” rate cuts.

The average reading for hard landing that anticipated recession is 78%. The current reading is even higher.

Author Bios

Macro Strategy Team

The Macro Strategy team provides cross-asset research and market intelligence across developed and emerging economies. Their expertise in FX, equities, and fixed income is complemented by proprietary indicators on investor behavior, inflation, and sentiment—turning complex data into actionable insights that help clients anticipate risks and capture opportunities.

1. Peter L. Bernstein Award for Best Article in an Institutional Investor Journal in 2013; Bernstein-Fabozzi/Jacobs-Levy Award for Outstanding Article in the Journal of Portfolio Management in 2006, 2009, 2011, 2013 (2), 2014, 2015, 2016, 2021; Graham & Dodd Scroll Award for article in the Financial Analysts Journal in 2002 and 2010. Roger F. Murray First Prize for Research Presented at the Q Group Conference in 2012, 2021, 2023. Harry M. Markowitz Award for Best Paper in the Journal of Investment Management in 2022, 2023. Doriot Award for Best Private Equity Research Paper in 2022.