Signs are pointing to a coming U.S. recession, according to an economic indicator that has preceded every recession over the past five decades.
It is known among economists and Wall Street traders as a "yield curve inversion," and it refers to when long-term interest rates are paying out less than short-term rates.
That curve has been flattening out and sloping down for more than a year, raising worries among some analysts that investors' long-term view of the market is not positive and that an economic downturn is looming.
But on Sunday, an inauspicious milestone was achieved: The yield curve remained inverted for three months, or an entire quarter, which has for half a century been a clear signal that the economy is heading for recession in the next nine to 18 months, according to Campbell Harvey, a Duke University finance professor who spoke to NPR on Sunday. His research in the mid-1980s first linked yield curve inversions to recessions.
"That has been associated with predicting a recession for the last seven recessions," Harvey said. "From the 1960s, this indicator has been reliable in terms of foretelling a recession, and also importantly, it has not given any false signals yet."
Still, many economic forecasters do not see a recession on the horizon.
For instance, Randal Quarles, the Federal Reserve's vice chairman for banking supervision, has said that the gap between short- and long-term interest rates does not mean the U.S. is moving toward a recession.
And then there is a sea of bright economic news setting the backdrop for the yield curve inversion hitting its three-month mark: Unemployment is at a near historic low. The stock market is going strong. The S&P 500 is up 17% for the year. And while some economists say the pace of growth may be slowing, the consensus view is that a dramatic economic plunge is not on the horizon.
But Harvey says no single economic predictor has the impressively prescient track record of the yield curve inversion.
"Yes, the economy looks good right now," Harvey said. "But the yield curve is about the future. It captures the expectations of the broad market in terms of what might happen in the future." -snip
Been said for the last year or two that what's been happening policy-wise will lead us to another recession, so save your pennies.
Oh no, the sky is falling!! The world is about to end (just ask AOC lol) and it's all because of the big bad orange man waaah, waaah, waaah!!
Big bad orange man was also...like... TOTALLY responsible for the fall of the roman empire and the crucifixion of Christ as well!!
Orange man bad! Orange man bad!! Orange man bad!! Her derp!!
__________________ Paleontologists have tried to turn Archaeopteryx into an earth bound feathered dinosaur. But it is not. It is a bird, a perching bird. And no amount of 'paleobabble' is going to change that.-- Alan Feduccia-a world authority on birds, quoted in "Archaeopteryx:Early Bird Catches a Can of Worms," Science 1994, p.764-765
Last edited by eThneoLgrRnae on Jul 5th, 2019 at 04:22 PM
However, the Shadow State shows a recent downward trend in unemployment. We are still not back to pre-2008 recession levels of unemployment, according to Shadwostats.
So while Trump and his administration may talk about how well the economy is doing, it is still sick and recovering from the Great Recession.
Edit - And if a recession does strike, I hope it strikes at the end of 2020, in December.
If anything it goes to show how strong the Fed is in controlling our growth and spending/saving.
Nostradamus economics!
PS get your annuities now here is a link for my "educational" page where I can show you how to save for the future despite tumultuous stock/invest forecasts........buy gold NOW
Last edited by snowdragon on Jul 5th, 2019 at 04:37 PM
The fact is that we've had the longest expansion cycle in modern times since the last 08 recession. It is only a matter of time, though I wouldn't count on an inverted yield curve being an indicator of it happening very soon. Also this is old news.
Your Lord knows very well what is in your heart. Your soul suffices this day as a reckoner against you. I need no witnesses. You do not listen to your soul, but listen instead to your anger and your rage.
DOW, Russell, S&P, and NASDAQ have hit record highs in the last few days. Remember, the Russell Index is much more indicative of the medium to small "guys" in the market and a better barometer for the economy.
So what's this about economists saying we are in a recession?
That article is from June, 2020. The damage from government policies related to the coronavirus is why it was called a recession. Which should be obvious.
__________________
Last edited by dadudemon on Dec 3rd, 2020 at 10:26 PM
Lol so those in this thread claiming they got it right didn't.
Good stuff.
__________________ Chicken Boo, what's the matter with you? You don't act like the other chickens do. You wear a disguise to look like human guys, but you're not a man you're a Chicken Boo.
Trust me when I say you don't want to bring gaslighting into the conversation.
__________________ Chicken Boo, what's the matter with you? You don't act like the other chickens do. You wear a disguise to look like human guys, but you're not a man you're a Chicken Boo.
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Jul 5th, 2019 04:11 PM
