Headed for recession? Two stock markets claim so
Chairwoman Yellen doesn't see the economy 'due' for a recession: "There is always some chance of a recession in any year, but the evidence suggests expansions don’t die of old age".
The WSJ reported a day earlier that "the odds of recession in the next 12 months have climbed to 21%—double the level of a year ago and the highest since 2012, according to the average estimate in the monthly survey."
A different articles stated directly that investors are spooled: "Industrial production, corporate profits and the stock market have all posted declines in recent months, suggesting weakness in manufacturing and business growth that has helped spook investors. Economists are also puzzled by the disconnect between job gains—up 2.4% in the fourth quarter of last year—and growth in the overall economy, which expanded just 0.7% in the same period."
About those odds of a recession - it really depends what variables you pay attention to, as Greg Ip says: "[the] dichotomy is neatly captured by two indexes compiled by Cornerstone Macro. One, using financial indicators such as the stock market and corporate bond yields, puts the probability the U.S. is now in recession at 50%. The other, which adds in macroeconomic data such as loan delinquencies and inflation-adjusted income, puts the probability at just 28%."
A stock market correction of 7-8 percent in the U.S. over three months is hardly catastrophic. If China's engine can keep going despite a sharp fall of stock prices, then the U.S. economy can probably do so as well.