The Recession Watch Index compiled by Comerica Bank, which forecasts the likelihood of a national recession occurring within the succeeding 12 months, registered a 28% probability in August, a 1-point drop from July's reading.
The Comerica index has remained at or near the 28% level since July 1996. "The national economy has not shown this level of stability in decades," said Comerica economist William T. Wilson. "Very simply, our index is predicting continued economic expansion well into 1998."
Comerica's index is designed to forecast an economic slowdown or recession well in advance. The index is based on a weighted average of three leading indicators: spread in the yield curve for Treasury securities, adjusted bank reserve growth, and the Commerce Department's Index of Leading Indicators.
The index last predicted a national recession in July 1989, and a recession began in August 1990, lasting until the spring of 1991. The economy has been expanding since then-one of the longest peacetime growth periods on record.