FiveThirtyEight writer talks possible recession and the 2020 presidential race

FiveThirtyEight senior writer Amelia Thomson-Deveaux discusses the possibility of the country going into a recession during the 2020 presidential race.
7:01 | 08/22/19

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Transcript for FiveThirtyEight writer talks possible recession and the 2020 presidential race
Turning out of the economy in the recession fears that have gripped discussion on Wall Street for the past week as stocks have gone on a roller coaster even spooking the president. For the past few days talking about possibly taking some emergency measures. But all of us are asking here what are the odds that a recession is actually going to happen our economists spot Annan in their predictions. That one could be right around the corner while our friends at 538 had been. Taking a look at that I'm joined now by Emilia Thomas Devoe who has a great piece separate around 530 looking at that very question it turns out Emilia. Economists don't always have the best prediction skills on this one. That's right yeah economists are generally not good at predicting exactly when Rick action will. The current winner Rick action strike and keep it in studies that responds study that looked. Patrick sessions from all over the world over a several decade period and economists predicted really very very few of them. I'm and part of the trouble in bit it's just really hard to predict with any certainty what's going to be happening in the economy you know as far as people are talking about what would happen in. I'm there's a recession during the twenty when he raised what happens. I'm ignorant fashion comes here after that and the fact is that it's just very difficult to stay with any certainty when the recession will be coming. You can say you know there clues and sign that an economic downturn made the impending. But I'm economists just don't have the tools to stay you know Nino are passionate going to economy in twenty funny warrant went on one. It simply you know it it's interest in because. We we know that recessions happen one almost certainly as you rode your peace will happen again sometime so really the question is one of timing. On you talk about indicators and anyone ask you about this one it's getting a lot of play on social be. Inverted yield curve this funky bout chart that basically it is a sign warning sign to some investors that perhaps. One is near tell us about that does that actually. Give us any of firmer sense that one could be at least coming in in the near future. What continent I'm threatened when it outfitted in a reliable indicator. A coming economic downturn. And that's because it basically a reflection at. How investors are feeling about the future. So it's not that an inverted yield curve causes a recession economy. But it sort of a way of seeing how Coke their feeling about whether they think the economy is going to continue. To be strong and those are people who were you know investors following the market have a lot at stake here. And it has been quite accurate. At. But the trouble is you look at the lead time between when the yield curve invert and when a recession actually comment. And it anywhere between six months which you know it is quite England and almost two years so it's a really really why they hadn't. And that the difference between you know every fashion coming right in the middle of the presidential race and one coming well actor and next. President comes in opposite. Huge political stakes in that window which is as you say pretty wide so when I think we all need to take a breath this is a good reality check. And your piece a male heir wondering Jordan Phelps back into this over at the White House because. If it does seem to two in the alias porn Jordan that this is sort of pseudo science nobody really knows in fact. The president keeps insisting that one is not happening now a recession is not happening it's not imminent and yet. Aides are sort of is sending me these mixed messages where there are sort of scrambling to did to talk about emergency measures for an emergency they claim. Isn't actually happen. Yet Kevin on one hand the president doesn't want to let on that there could be a recession coming. But on the other he has been pining he signals. That he too in the administration is concerned just to give you this week as an example it's really been head spinning when it comes to tax cut. They first told us that payroll tax cuts were not on the table that that was not under consideration. And it just hours later the president himself plus. He actually was thinking about it but being just 24 hours later the president had never mind not thinking about that after all because the economy is so strong. But DeVon you'll recall was just last week that the president how to rally in New Hampshire and they ere he put the economy front and center and that rally telling people. Whether they love him or hate him they have to vote for him because otherwise he warned there for a one case will go down the tubes. So the president very much trying tech have it both ways here saying arguing that he is the only president who can. Kind of bring the economy to to new heights but at the same time. There are some real worrying signs in the economy right now whether or not the president wants to acknowledge that publicly. In summary of the signs Emilia are sort of in consumer sentiment related investor sentiment related they're not actually. It's sort of you know concrete meaningful indicators of actual economic growth for example but we did get some new numbers today from I think Bloomberg consumer comfort index which. Is down to a seven month low suggesting consumers are at least starting to absorb some of this anxiety. About the economy you'll also took a look at. Whether or not some of these headlines in all this talk could be self fulfilling what's your sense anatomy could we talk ourselves in a recession. Well that's something that I asked the economist at spoke to frank Heath you know is discussion of moderate fashion I think it could actually. Beats him one happening and what they've said is you know it's possible. It's possible that if people respond to be headlines by for example you know with saving their money and not going on vacation in the next few weeks at a hammer or you know not spending in other ways their businesses respond. I think you know where we're gonna hold off on hiring for an hour expanding industry to see what happens that that could be something that they're further slows down economy and I'm. Actually kind of reinforces that issued a everyone's pointing to you. I'm on the other hand you know it's possible that that discussion of these sort of worrisome signs. Could be an opportunity for arms and kind of intervention. That could hurt it changed at odds of earth action coming and I think that's part of the typical scene in taking it signals and saying you know we know that a recession is going to come next year record coming two years because so much of this as he adds noted yesterday. Based on how people feel about the economy and so much can change. Great reporting at 538 dot com from a million Thomas Devoe thank you so much million for coming on our thanks to Jordan talks at the White House as well he can. Check out that article. On our web site about how bad economist traditionally had been in predicting the timing and recession. And though perhaps one could come generally soon are our thanks to that.

This transcript has been automatically generated and may not be 100% accurate.

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