U.S. recession risk declining, according to betting contracts

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The chart below comes courtesy of Bespoke Investment Group and shows the Intrade contract for whether or not the U.S. will go into a recession in 2012. For the contract to pay out, U.S. real GDP would need to be negative for two consecutive quarters. Based on actual bets, the odds of a recession in 2012 are currently at 38.2%, down from a high near 50% at the beginning of October. “Since then, economic indicator data in the U.S. have gotten much better, and the move lower in the contract odds reflects this,”said Bespoke.

Source: Bespoke Investment Group, December 9, 2011.

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