Why a Historically Reliable Recession Indicator May No Longer Be Accurate
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Wall Street’s most reliable recession indicator started signaling trouble in 2022 and hasn’t stopped since, but so far it has proven wrong every time.
The yield on 10-year Treasuries has been lower than that of many shorter-term bonds, a scenario known as an inverted yield curve, which has historically preceded nearly every recession since the 1950s.
Traditionally, an inverted yield curve suggests a recession within a year or two. However, not only has a recession not occurred, but U.S. economic growth remains stable.
This has led many on Wall Street to wonder why this once-reliable indicator has proven wrong this time and whether it still signals economic danger.
"So far, he hasn't predicted a recession," said Mark Zandi, chief economist at Moody's Anal...