Probability of Recession: BackoftheEnvelope Calculations

Twin Drags on the Economy: Long Term Interest Rates & Oil Prices
A recent article in Barron's provided a quick calculation for the probability of a recession citing MacroMavens commentator Stephanie Pomboy. The logic stems from the idea recessions follow the simultaneous increase in longterm interest rates and oil prices. Per the article:
Over the past 30 years, the economy has headed south whenever the sum of the yearoveryear change in Baa corporate bond yields, plus the change in oil prices, has topped 100%. That was the case in both the 200001 postdotcom bust and the 200709 housing debacle.
Source: Randall W. Forsyth  “Recession Rumbles Grow Louder as Impact of Economic Stimulus Fades”  Barron's  3/14/2022  Visit

J.P. Morgan came up with a quick backofthe envelope calculation for the probability of a recession, and determined that as of March 8th the U.S. equity market had priced in a probability of 50%.
Here's how the math works: The average S&P 500 decline over the last 11 U.S. recessions was 26%. As of the date of the report, the S&P had declined 13%. "Thirteen divided by 26 produces a 50% recession probability."
Source: Randall W. Forsyth  “Recession Rumbles Grow Louder as Impact of Economic Stimulus Fades”  Barron's  3/14/2022  Visit