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Interestingly, the US has never had a recession that wasn't preceded by an inverted yield curve, but not every yield curve inversion has been followed by a rece
by WillPostForFood 8y ago
Interestingly, the US has never had a recession that wasn't preceded by an inverted yield curve, but not every yield curve inversion has been followed by a recession.
- hire_charts 8y agoCan't you essentially fabricate this statistic by controlling for the amount of time that counts as "before", assuming the inverted curves happen more often than recessions?
- mannykannot 8y agoI am guessing that "before" means that the inversion persisted until the economy was technically in recession.
- tfehring 8y agoNot quite - see https://fred.stlouisfed.org/series/T10Y3M https://fred.stlouisfed.org/series/T10Y3M for reference. The grey areas are recessions, and values below 0 are inversions. To address the GP’s point, the relationship could be fabricated, but the data don’t indicate that that’s happening.
- Kinnard 8y agoThis doesn't account for recessions before the creation of the Federal Reserve.
- nickles 8y ago> the US has never had a recession that wasn’t preceded by an inverted yield curve This is incorrect. Most recessions in the post WW2 period have been preceded by an inversion of the 3m/10y UST curve, but it did not precede a few recessions in the USA during the first half of the 20th century. [0] http://bonddad.blogspot.com/2011/07/yield-curve-and-pre-ww2-recessions.html http://bonddad.blogspot.com/2011/07/yield-curve-and-pre-ww2-...
- sytelus 8y agoWhen large number of people are betting there is recession, there will a recession simply because people are collectively contracting their consumption in anticipation.