4 ms·
Apparently it has predicted the last seven recessions. People are using the expression "self-fulfilling prophecy."
by defertoreptar 8y ago
Apparently it has predicted the last seven recessions. People are using the expression "self-fulfilling prophecy."
- refurb 8y agoExactly. Every one looks at the last 10 years of a bull market and says “recession is coming!”. Many of these people are bidding on these same bonds. So does the inversion signal a coming recession or just the belief of a coming recession?
- AnimalMuppet 8y agoIt may have predicted ten out of the last seven recessions. That is, sometimes the yield curve inverts and the recession doesn't happen. So it's not quite a self-fulfilling prophesy - though it still may be a sometimes-self-fulfilling prophesy...
- dajohnson89 8y agocorrect. we can't determine the usefulness of this statistic without a false positive rate.