The Arcane Art of Predicting Recessions

Predicting a recession or anything in a market is a question of observing the market and making a guess. 
By Prakash Loungani

Assistant to the Director

External Relations Department, IMF

Financial Times

December 18, 2000

Predicting a recession or anything in a market is a question of observing the market and making a guess.  You might as well use a crystal ball which whatg I have been saying for a while.  It is a number game and the lucky can get to brag for a while, but it was still a guess. 

Prakash Loungani wrote a great article on the subject and says that
private forecasters’ record of failure to predict recessions is virtually
unblemished.  With only two of the 60 recessions around the world in 1990s were predicted.  In other words, two-thirds of the recessions remained un-detected seven months before they occurred.

You can read his entire article here which should be a sober humility test for many of us who insist on predicting things that we have, frankly said, little data to compute a real case scenario.

DataQuick reported California had its slowest home sales since 1996.  On a positive note, that was the last year of the ’90s crash in California.

New, resale houses and condos were up almost 5% from November and down
22.2 %  for December 2005.

Statewide, the
median price paid for a home last month was $474,000, up 1.1
percent from November, and up 3.5 percent for
December a year ago.

Calculated Risk.