With all the varied estimations of the chances that the U.S. is headed into a new recession, someone must have gotten it right ... right? But whom?

Is it the Federal Reserve Bank of San Francisco, which recently published a research paper estimating that the odds were "greater than 50-50" that the U.S. will experience a recession sometime in 2012? That view was backed up by Pacific Investment Management CEO Mohamed A. El-Erian, who recently told Bloomberg TV that he found the economic conditions in the U.S. "terrifying" and placed the odds of the country entering a new recession as high as 50%.

What about surveys of economists that take a more optimistic view? The National Association for Business Economics recently said that as a group, "the panelists saw a recession as the least likely scenario." How unlikely? A 7.4% probability. That's about two out of 49 economists surveyed.

Then there's a Nov. 4 poll conducted by Reuters that found that Wall Street economists put the odds of a recession next year at 30%, down from 35.5% a month earlier.

Plenty of Opinions, Little Precision

It's no wonder investors are having a difficult time digesting the divergent views of experts that have appeared in the media lately.

"Nobody has a good track record in predicting recessions," says Patrick Newport, an economist at IHS Global Insight, in an interview. "Anybody who says they know what's going to happen doesn't know what they are talking about."

Part of the problem is that we live in confusing times. Part is that nuanced economic analysis doesn't often produce the sensational headlines the media craves. Plus, economic forecasting is as much an art as it is a science.

Take the Federal Reserve paper. Authors Travis J. Berge, Oscar Jorda and Early Elias argue that the U.S. would be dragged into a recession in the event of a European sovereign debt default. But what are the odds of that, and what would be the precise impact here? Answer cloudy, ask again later. "Because the international odds of recession are more imprecisely estimated, one must be careful with a strict interpretation of this result," they write in the report. "However, if we navigate the storm through the second half of 2012, it appears that danger will recede rapidly in 2013." The authors were not available for comment.

There are economists who share the paper's pessimistic tone. Newport, whose views are part of the NABE survey, places the odds of the U.S. entering a recession in 2012 at 40%, up from an earlier forecast of 25%. The reason for his heightened worries, not surprisingly, is the ever-changing situation in Europe.

"We see no reason to lower our view" of a recession's probability, Newport said.

Is There Wisdom in Crowds?

Parthenon Group deputy chief economist Richard DeKaser, who is part of the NABE committee that administers the survey, says that investors should pay closer attention to the consensus of experts rather than the views of a particular individual.

"History has shown that the most realistic predictors [of future economic activity] are consensus-based surveys," he said.

Nonetheless, it's the job of economists such as Newport and DeKaser to make their best educated guess about the future of the economy, because policy needs to be proactive rather than reactive. Not providing a forecast is not an option because that sends the message that things are not changing, which in all likelihood isn't true.

Investors who are confused shouldn't feel bad: The economic situation we're in is so unprecedented that experts aren't sure what may happen next either. So take all the predictions with a grain of salt, and wait like everyone else to see what the future holds.

Motley Fool contributor Jonathan Berr urges readers not to be led astray by sensational headlines.


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Michael

The world financial system, is near collapse. It would have collapsed already if not for more creative (fraudulent) bookkeeping methods, and 10's of Billions given to the biggest and most broke banks on the planet. Thankfully governments have taken it upon themselves to bailout the big banks with taxpayer money. Higher taxes on business and citizens of course increases unemployment, and increases those who now need welfare from government, and lowers government revenue from taxes - but I'm sure it will work out just fine. After all, those broke banks have plenty of money to give obama and other socialists to campaign for just this kind of solution.

On another front, Gold continues to be dumped by big banks and major players. Do you think they know the prices are on the verge of collapse, and they want the public (the little guys like you and me) to buy their positions before the big drop? Why is it Soros is, and has been shorting gold? I'm sure theres no problem their either.

Obama is working hard to get us out of Iraq, his "victory" will conclude when orthodox muslims (sometimes called radical muslims, like muslim brotherhood) take over that country too. He already gave away Egypt and Libiya to these folks, and the mainstream media love that the people in those countries are close to enjoying "democracy".

Time to hold your cash folks, get out of mutural funds, maybe even short the stock market and the commodities markets, because they are going down, and it won't be minor like 08 or 09, this time it will be far worse.

December 15 2011 at 6:27 AM Report abuse rate up rate down Reply
define.destiny

I smell B.S. - Wall Street is broken and Washington is corrupt... here's where I get my financial advice from http://bit.ly/2012invest

December 08 2011 at 11:26 AM Report abuse +2 rate up rate down Reply
savemycountry911

The economy is crashing. Look at how much we owe. Look at the loss of jobs. It's going to be a very bumpy ride.

December 07 2011 at 3:43 PM Report abuse +1 rate up rate down Reply
1 reply to savemycountry911's comment
Jon

Social unrest is on the rise. Who does still taping his eyes and does not want to see the direcction we are heading. It is just a matter of time till the whole thing collapses. We will have a Western Spring soon when people will rioting in Berlin, New York and London.

http://djia.tv/press-tv/oecd-report-portugal-champion-in-social-economic-gap/

December 08 2011 at 10:26 AM Report abuse rate up rate down Reply
wfreeberg

No one can predict the future but in the last three years the dow has made a steady improvment from the 6,000 to 12,000. If we can achieve 1/4 of that over the next three years I'll be happy.

December 07 2011 at 11:56 AM Report abuse -1 rate up rate down Reply
stevenbeller

"But whom?"? Can we please have a modicum of correct English grammar, even for business journalists?

December 07 2011 at 9:18 AM Report abuse -1 rate up rate down Reply
donut999

These guys have about as much chance of making an accurate prediction as my 4 year old grandson. They are using old tools that have pretty much lost all meaning. First and foremost, the decession we have/had is unlike anything in history. The closest thing to it is the actual depression in the 30's. Furthermore, it is a brave new world out there and events occur that are completely beyond our control. We involuntary moved in to Keynesian economics about 07, and everything that has happened since skews any meaningful analysis. The news du jour or a black swan event demolishes all the charts and graphs. If they were honest, they would admit to being clueless, but that doesn't pay much. No harm in trying though. Only stat I look at is the monthly ceridian pulse of commerce. It is completely unbiased, and uses the best, current indicator---diesel fuel consumption. The number will come out about the 10th of the month. Sure hope it is flat or up.

December 07 2011 at 8:57 AM Report abuse rate up rate down Reply
gmydogbud

Wonder where all the Highly Educated, Ivy League, Professorial Types, thought their Tax Base would come from when they took Lobbyists & Big Business Money, signed NAFTA & Looked The Other Way, While Big Business Took American Manufacturing Jobs, OVERSEAS ! While Multimillionaire Congress men and women, engage in INSIDER TRADING + Take A Salary + Every Perk They Can Get Their Hands On + DEMAND & GET - Certain Types Of - PLANES, American Citizens Are Preached To About - SHARED - SACRIFICE - ! The Ruling Class - Thinks They Are Better Than Their Fellow American! Perhaps The Wall Street Protesters, Should Expand Their Operation , To Washington, D.C. As Those Are The People Who Have Caused All This!!

December 07 2011 at 7:09 AM Report abuse +1 rate up rate down Reply
zebra365

The American Institute for Economic Research (AIER) has followed 12 leading, 6 concurrent, and 6 lagging indicators for the past 75 years. They are very good at calling turns in the business cycle but these indicators often do get revised after they are published.

Right now their indicators call for continued US expansion. Of course their indicators do not anticipate "black swan" events like a Eurozone sovereign country default. Which is what most of us are worried about these days.

AIER is useful in other ways. It's a non-profit and the website is AIER.org. Worth a look IMHO.

December 07 2011 at 6:50 AM Report abuse rate up rate down Reply
accuscope

What a load of crap!.... They know exactly what's happening!... Bankers created this crisis, then it can only be solved by Bankers!... Its called transfer of wealth and political power!... Banks can and do move governments, and they get governments to change monetary policy in their favor, As a result the power brokers are getting even richer via our tax money!... They do as they please and we bail them - they end up richer and more powerful, We end up broke.

December 07 2011 at 6:26 AM Report abuse +1 rate up rate down Reply
Michael

Here's the bottom line. The world economy is wrecked. But at the moment it still looks 'good'. The reason it's wrecked is simple, it's the debt problem. Currently the blame is placed on Wall St. , and yes they are complicit, but it is the politicians who allowed the real criminals to have their way, and those criminals are the big banks. Banks like Goldman Sacks, who have bet the markets, and lost. They owe 100's of TRILLIONS of dollars on the bad bets. But rather than let them go broke and allow everyone a fresh start, albeit it will be difficult and have pain, the politicians have decided to back the big Banks. It's easy to see why, they pour cash into politicians pockets.

Now with the banks picking their leaders to head up Governments, such as in Italy, Greece, and Germany, they will continue to strip wealth from the citizens of those and other countries. The more they sqeeze the taxpayers, the less their will be, and continuing to decline tax revenues will be the result. These banks are transferring their losses onto governments, who then pass them to their citizens. The end result will be many times worse than if we allowed those big Banks to fail, instead of allowing them to commit fraud on their books. How is it that big banks can value assets at "mark to fantasy" prices, rather than "mark to market"? Just that fraud allows the banks to extend their date with destiny. If I could mark to fantasy my home, I could say it is worth the highest valuation it every had. Use that as the baisis of its current value and seek to pull out the equity in it, and go to the casino, and hope for the best. But I can't use make believe numbers to value my house, but Big Banks can with their "assets". One other thing, yes the banks are going to the casino to try winning back their losses, but even if they start to win, their debt is leveraged over and over, and they can never win enough money to get out of the hole they have dug. So their Debt is the problem.

So what is the solution? We have already heard, more leveraged debt to pay the debt they currently can't pay now. How does that work, I can't afford payments of $100 per month on my $10,000 car, so I buy a new car and owe $20,000, and my new payments will be $200 per month, and at the same time my pay for working has gone down, and I have more bills to pay. That is the analogy of what Big banks are doing to national and world financing.

Hold on to your cash, pull it from the banks now, its yours. soon you won't be able to, with "bank holidays" and fine print to FDIC insurance repayment of your moneys. That is if they even try to honor that insurance.

December 07 2011 at 5:46 AM Report abuse +2 rate up rate down Reply
1 reply to Michael's comment
donut999

One of my favorite lines is "Hey, I have told you a million times not to exaggerate" Probably ought to tone it down and change trillions to billions if you want anyone to really pay attention.

December 07 2011 at 9:01 AM Report abuse rate up rate down Reply
1 reply to donut999's comment
Michael

Your right, the truth may cause people not to pay attention. Maybe we should water down the number like you suggest, so why even billions, lets say thousands.

December 15 2011 at 6:30 AM Report abuse rate up rate down