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Illustration: Eniola Odetunde/Axios

There is a 70% chance of recession within the next six months, according to a new recession indicator that examines the economy using a method previously used to analyze the resemblance of human skulls.

What it means: The new indicator comes from researchers at State Street Associates and MIT's Sloan School of Management who applied the principle of Mahalanobis distance to create a predictor of economic booms and recessions they call the KKT Index of the Business Cycle.

  • "This index offers a precise probability of recession or robust growth ... by comparing key variables to the patterns that prevailed during historical episodes," the study's co-author William Kinlaw, senior managing director at State Street Associates, tells Axios.
  • It creates the new business cycle metric by incorporating U.S. data including industrial production, nonfarm payrolls, stock market return and the slope of the Treasury yield curve (10-year rate minus the federal funds rate).

What's happening: The latest reading shows that recession is more than twice as likely as high growth in the next six months. When the probability of recession last reached these levels, a recession occurred 70% of the time.

  • "This level is driven primarily by two factors: weakening industrial production and the slope of the yield curve," Kinlaw says.
  • "By comparison, the unconditional likelihood of a recession occurring in any six-month period is only 17%."

Why it matters: Going back to 1916, the KKT Index has risen "leading up to every recession so that the combination of its trajectory and level provides a reliable indicator of the likelihood of recession," the study finds.

Go deeper:

Go deeper

Updated 10 mins ago - World

U.S. sanctions Russian officials over Navalny poisoning and detention

Pro-Navalny protesters in front of the Brandenburg Gate in Berlin. Photo: Omer Messinger/Getty Images

The U.S. will sanction 7 senior Russian officials over the poisoning and jailing of opposition leader Alexey Navalny, senior administration officials told reporters on Tuesday.

Why it matters: The sanctions represent the first penalties the U.S. has imposed on Kremlin-linked officials since President Biden took office and pledged to confront Russian aggression.

Democrats to take up immigration reform next week

Biden in the Oval Office in January. Photo: Chip Somodevilla/Getty Images

The House will vote on two immigration bills next week, including one to protect undocumented immigrants who came to the U.S. as children, Majority Leader Steny Hoyer (D-Md.) said Tuesday on a call with the Democratic caucus.

Why it matters: This is likely the only realistic shot the Biden administration has at this point to pass immigration reform.

Scoop: Biden briefing calls for 20,000 child migrant beds

President Biden, during a virtual meeting with Mexican President Andrés Manuel López Obrador. Photo: Anna Moneymaker-Pool/Getty Images

A briefing scheduled for President Biden this afternoon outlines the need for 20,000 beds to shelter an expected crush of child migrants crossing the U.S.-Mexico border, Axios has learned.

Why it matters: The rapid influx of unaccompanied children is building into the administration's first new crisis. A presentation created by the Domestic Policy Council spells out the dimensions with nearly 40 slides full of charts and details.