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A plunge in recent economic data puts the probability of a double-dip recession above 80%, according to modelling by Bank of America Merrill Lynch released Wednesday, reflecting the toll the U.S. debt downgrade, Europe’s woes and stock market volatility has taken on economic activity.
The recent dismal readings from the Philadelphia Federal Reserve and the University of Michigan were enough for Merrill to raise its overall probability of a contraction in the next year to 40% from 35% at the start of this month.
A survey of manufacturing in the Philadelphia region plunged to its lowest level since March 2009, according to the Fed last week. Consumer confidence is at its lowest level since May 1980, according to a Thomson Reuters/University Michigan survey released on August 12.
