With the stock market off to its worst start of the year in history, China's economy weakening, oil prices plummeting to levels not seen in a decade, and retail sales tanking to levels not seen since the last recession in 2009, some analysts are predicting a recession in the United States by the end of the year.
That probability, as measured by the CNBC Fed Survey, is at its highest level since 2011.
But at 28%, it shows that most experts do not expect a recession this year.
One fairly reliable recession indicator, the spread between the 2-year and 10-year bonds has weakened just about to its lowest level since the last recession. But it tends to signal recession at zero... So at 118 basis points, it's softer, but not soft enough to signal recession.
The trouble is that, while there is weakness, it is not sufficient so far to bring the U.S. economy down.
Manufacturing looks to be contracting. Corporate profits are said to be in recession. And exports are weak. But the consumer is strong as is job growth and the service sector.
Several Wall Street economists have been thinking hard about this and mostly come to the conclusion that a recession in not in the offing.
RDQ Economics said "think there is too much pessimism about the U.S. economy and recession fears are overblown. However, we see little on the economic data calendar that will challenge this pessimism in the next few weeks."
Nomura also said that a recession in the U.S. is unlikely, "But two structural changes raise the probability of a recession: lower potential growth and a low equilibrium real rate of interest."
The National Association of Counties issued a report recently that showed that only 93 counties had recovered completely from the 2008 recession. Everyone outside Washington, D.C. – which is booming – knows how weak the economy is. The recovery from the Big Recession is not uneven. It is nonexistent and has been since recovery was declared in 2012.
The political ramifications of a recession would be disasterous for Hillary Clinton or Bernie Sanders, both of whom have embraced President Obama's economic policies. No doubt President Obama will do everything in his power to hide any bad economic news during the fall campaign. But unlike some other issues, the economy is very personal to most people. "Am I better off this year than I was last year?" is an easy question for most people to answer.
For Democrats, the election will hinge on how the voter responds.
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