Federal Reserve Recession Tool Flags High Chance of Economic Downturn Within 3 Years

The Federal Reserve Bank of New York's recession probability tool uses the yield curve spread to predict recessions. It currently shows a 61.47% chance of recession by January 2025.

This tool has accurately predicted every recession since 1966, with only one false signal in that time.

Recessions typically precede stock market declines, so this indicator suggests potential trouble ahead for stocks.

However, historically recessions and bear markets have been short-lived compared to expansions and bull markets.

Long-term investors should maintain perspective and patience during market downturns rather than panicking.