Has anyone seen Ed Yardeni's latest recession prediction?

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I heard this afternoon that Ed has bumped it back up to 70 percent. Interesting to see if anyone else has seen this.

-- cw (cwiowa@uiowa.edu), May 09, 1999



I thought Dr Ed's estimate has been at least 70% chance of recession for quite some time now, with more recent refinement of 40% depression inclusive of that. I seem to recall that this refinement was the source of the L.A. Times misreporting of his "change of heart" a couple of months ago. Do have new information? Where did you hear this?


-- Spindodoctor (spindoc_99_2000@yahoo.com), May 09, 1999.

Sorry, cw, that should have read "do you have more information"?


-- Spindoctor (spindoc_99_2000@yahoo.com), May 09, 1999.

This is an excerpt from Yardeni's 5/10/99 Y2K Reporter:

Too Close To Call

It is widely believed that the United States is ahead of other countries in preparing our computer systems to recognize that 01/01/00 is the first day of 2000, not 1900. It is widely assumed that American companies, especially the bigger ones, are most likely to get this job done in time. This might be a bad assumption. Despite assurances by most large US-based companies that they will be ready for the century date change, very few were actually ready at the end of last year. According to the disclosure reports they filed with the Securities and Exchange Commission (SEC) during the fourth quarter of 1998, most large companies expect to be done with their Y2K projects sometime during the second half of 1999. The data provided by the largest companies suggest that they were just half way through their projected Y2K budgets at the start of this year.

Even more disturbing is that a March 1999 survey of 1,600 large Canadian companies found that only 18% expected to be ready at the end of April. Last May, this same survey found that 15% reported that they were ready at that time for Y2K. Is it possible that the proportion of large companies that are prepared for the century date change increased by only three percentage points in the past year in Canada? If so, are the Canadian results a good proxy for the situation in the United States? I suspect so, especially since Canadian company managers have been at least as aware and alarmed about Y2K as their American counterparts.

Even if the data understate the actual progress of American and Canadian companies  even if they sprint to the finish line just in time  Y2K is not a race we want to win alone in North America. If our biggest companies are still struggling to finish the job, there are bound to be lots of small and medium size enterprises (SMEs), especially overseas, that simply fail to complete their projects. The consequences for global supply chains are likely to be very disruptive, and likely to cause a global recession.

I don't think Yardeni has lowered his prediction from 70% since it got there...

-- Nabi Davidson (nabi7@yahoo.com), May 09, 1999.

Thanks. I also heard 70% and this article confirmed it. It could be a rocky year!

-- cw (cwiowa@uiowa.edu), May 10, 1999.

His prediction has stayed constant for quite a while, but "only" 5% chance of a true depression, not 40%. Compared to most people on this forum, Yardeni is a true middle grounder: he expects a meaningful Y2K-induced recession, on the order of 1973-74, but nothing more and a boom market following the recession.

-- BigDog (BigDog@duffer.com), May 10, 1999.

And I agree with Yardeni, although we differ on some of underlying fundamentals.... Personally, I'd lower the depression risk to 1%.


-- Mr. Decker (kcdecker@worldnet.att.net), May 10, 1999.

About a month ago, Yardeni was misquoted by a reporter as having lowered his recession probability. It has actually remained at 70% for a long time.

-- Bill Byars (billbyars@softwaresmith.com), May 10, 1999.

My view has long been similar to Yardeni's. In terms of the percentage chance of a depression, that depends on your definition of depression. 5% is not out of the question. Most of the world (including the US) is farther behind than publicly admitted. That includes the European banks.

Got cash flow?

-- Drew Parkhill/CBN News (y2k@cbn.org), May 10, 1999.

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