With so many commentators and reporters braying about the precise odds of a recession these days, there is a 100% chance that The Business Press Maven is going to pound his head repeatedly on his desk for a simple reason: When everyone starts talking like each other instead of following their own common sense... it is upsetting. Moreover, it is misleading. Conforming to faddish verbal convention in economic procrastinating (or reporting) takes the place of reason. Following the latest verbal tic is like trusting a horoscope. That means if you, the savvy investor, follow these formulaic predictions, there is a 90% chance that... Good Lord, it is catching! I am speaking about the latest word in ready made quotes, articles and headlines: just spout off (or write) about your guess for the precise numeric chance of a recession and you'll be quoted or get good play for your article. And headline writers, in on this latest game, have become oddsmakers. Have fun with how comically popular it has become. Just don't make the mistake of listening to any of it. There is no way to confirm this, but I believe this whole sad excuse for public discourse started in a big way earlier this year.
Alan Greenspan , missing the limelight and knowing he had a book to peddle ran off at the mouth about a recession being "probable." Perhaps feeling he overdid it, he then changed his statement. Sort of downgraded it , if you will. He said a recession was "possible." This took us into Goofy and Pluto's land of linguistic lunacy, of course, because a recession is always "possible." In fact, figuring for convenience sake that recessions generally run two out of every 10 years, they are always "possible."
At the time, I joked that before you knew it, Greenspan was going to start laying odds like some street-corner bookie. I swear I was joking, but soon and sure enough, Greenspan had the chance of a recession pegged at exactly 33%. Put that figure in your spreadsheet and smoke it! Then, last week, while on a world book tour to promote
The Age of Turbulence: Adventures in a New World (The Penguin Press), Greenspan (aka Alan the Greek) said that the chance of recession had risen "significantly." How significantly from 33%? He was now on record for "less than 50%." The only problem is that the difference between 33 and 50 does not seem too significant, and none of it is too far off from the standard chance of, say, 20%. At least it's not far enough off for all the breathlessness. Pressed into an oddsmaker's corner by CNBC, Alan the Greek answered with what turned into the only one of these headlines that at least elicited a smile: The 42.35% Chance: A Chat with Greenspan . Want better odds? Once Alan the Greek gets quoted a few times running the line of recessions, fuhgedaboudit, everyone wants a piece of the action. Look anywhere you want for laughs, but don't take any of it too seriously. A couple of weeks ago, The Wall Street Journal weighed in with a headline: Likelihood of Recession Is Given Better Odds . How much better? Well, a month ago it was 28%, not much off the natural average. This month it's 36%, which may be the less than 50% that Greenspan was referring so obliquely too. (No words, by the way, on an over/under.)