Is there a recession on the way (say, some time next year)? It seems a silly question, with low unemployment, and projected growth of 4.7% here in the second quarter in the United States .. but a reliable indicator called the yield curve has been steadily trending down to zero. Typically, breaching zero means recessions inevitably follow.
The 2Q projection for economic growth is a whopping 4.7% (year over year), and retail sales are up by almost a percentage point as well, for May.
[From NYT article] ‘On Thursday, the gap between two-year and 10-year United States Treasury notes was roughly 0.34 percentage points. It was last at these levels in 2007 when the United States economy was heading into what was arguably the worst recession in almost 80 years’. My own comments: Some economists point out that we are still in a relatively low interest rate environment, and that the yield curve falling below zero might not indicate a recession will follow shortly. Besides, this graph shows that it took TWO years for the recession of ’08 to take hold after the yield curve first fell below zero.
