Watching Recession Indicators
Jeroen Blokland | Oct 23, 2019 11:17
The US 10Y-2Y yield curve inverted in August which, based on historical data, means a US recession should be expected somewhere in the second quarter of 2021.
Other indicators that have a pretty solid track record in forecasting recessions are, however, not flashing red. Building permits tend to drop sharply ahead of an economic downturn, but currently this is not the case. While building permits have been consistently lower since the financial crisis, they have risen over the last eight years. Initial jobless claims, which technically recording a low in April, remain exceptionally low, making it difficult to conclude that they have bottomed for this cycle. Hence, a US recession seems more likely further down the line.
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