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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Next Recession Is Going to Be Brutal
Market-watchers enjoying their first sip of coffee around 6 a.m. might have done a spit-take. For a brief period Wednesday morning, yields on two-year Treasury bonds were higher than those on ten-year ones a short-term investment was seen as riskier than a long term one, and the return therefore higher a signal that can portend major trouble for the economy. The last time the yields inverted was in 2007, before the great recession; the two times before that also directly preceded recessions. The dynamic flipped back before markets opened Wednesday, but stocks nevertheless dropped amid new fears of serious economic trouble ahead.
According to research from Credit Suisse (via the Washington Post) recessions historically have followed 18 to 24 months after the yield curve inversions like the one Wednesday morning.
Before we get too carried away, its worth mentioning that there are some who argue the yield curve invert isnt as reliable a recession indicator as its generally made out to be. Former Federal Reserve chair Janet Yellen struck a note of caution during a Wednesday morning appearance on Fox Business. Historically, it has been a pretty good signal of recession, and it think thats when markets pay attention to it, but I would really urge that on this occasion it may be a less good signal, Yellen said. The reason for that is there are a number of factors other than market expectations about the future path of interest rates that are pushing down long-term yields.
But sooner or later, the current economic expansion by many measures the longest in U.S. history is going to end. And thats particularly troubling when you consider how many Americans continue to fare poorly even in the current strong economy.
https://www.rollingstone.com/politics/politics-news/recession-yield-curve-poverty-tax-cuts-trump-871198/
Demovictory9
(32,468 posts)doc03
(35,362 posts)before Obama even got in office.
empedocles
(15,751 posts)for a dive that was over a year in the making.
Hoyt
(54,770 posts)childcare, college debt forgiveness, bolstering social security, etc., tougher to enact and maybe less of a campaign advantage.
But, not much anyone -- other than trump's so-called admin -- can do about it now.