Are we headed for a recession?

Talk of an impending recession has blown up since the start of the year – largely thanks to the abysmal performance of the stock markets.

The S&P 500, which just experienced the worst two-week start to a year ever, is down 8 percent since the year began.

According to Schwab’s chief investment strategist, Liz Ann Sonders, there have only been five other years since 1928 when the index fell by more than 5 percent in the first 10 trading days of the year.

Stock activity over the past two weeks has fueled talk of a weakening U.S. economy and the possibility of a recession.

In a recent note to its clients, the Royal Bank of Scotland said: “Sell everything except high-quality bonds.”

“We have been warning in past weeklies that this all looks similar to 2008. We dust off our old mantra: this is about ‘return of capital, not return on capital.’ … In a crowded hall, exit doors are small. Risks are high.”

RBS thinks China could be the crisis point for this recession, as the Lehman Brothers collapse was the catalyst for the 2008 financial crisis.

Not everyone is convinced of RBS’ prognosis, but there are several other big U.S. firms predicting a recession over the next one to three years.

Last month, JPMorgan put a 76 percent chance of a recession within the next three years, with a 25 percent of chance of a recession within the next 12 months. 

Meanwhile, Citigroup’s 2016 outlook warned that there is 65 percent chance of a U.S. recession in 2016, based on the fact that the U.S. economy enters its seventh year of expansion following the 2008-09 crisis.

Citigroup looked at data on the length of economic expansions in data from 1970 to 2014 across the U.S., U.K., Germany and Japan.

According to several market experts, much of the talk about a recession seems overblown.

In her latest commentary, Schwab’s Sonders said that “every predictive recession model I have studied still suggests a low risk of recession.”

She goes on to say that if the U.S. were in a recession or heading toward a recession, it would be the “first time in history” that the leading indicators did not roll over and provide ample warning.

“We are in a manufacturing recession, but at this point, the much larger services segment of the economy is showing sustained growth,” Sonders writes. “Historically, if the annual average of industrial production is down for an entire year, weakness spread to the broader economy. We have yet to see that kind of weakness, but it’s on our watch list.”

PIMCO global economic advisor Joachim Fels also acknowledged that a manufacturing sector recession and correction was spilling over into the broader economy, during a segment on CNBC’s “Squawk on the Street.”

However, he also thinks that – because of decent job growth, low energy prices and a strong residential construction sector – the economy will reaccelerate.

“I think we can still see something like 2 percent growth in U.S. this year, and therefore I think the markets are clearly exaggerating,” he told CNBC.