Clicky

  • Login
  • Register
  • Submit Your Content
  • Contact Us
Tuesday, August 20, 2024
World Tribune
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
Submit
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
No Result
View All Result
World Tribune
No Result
View All Result

Recession indicator now slows the economy, creator says

August 18, 2024
in Business
Reading Time: 2 mins read
A A
Recession indicator now slows the economy, creator says
0
SHARES
ShareShareShareShareShare

Recession indicator now slows the economy, creator says

The inverted yield curve—a recession indicator with a decades-long track record of accuracy—has evolved beyond serving as a warning of a future downturn and now sways the economy, its creator said.

READ ALSO

Morgan Stanley exec, entrepreneur’s teen daughter missing after tornado at sea

Millennial says hiring manager asked her to change out of shorts

The inversion takes place when long-term bond yields dip below short-term ones, an abnormality that historically has occurred when investors see more growth risk in the near future and demand a higher premium.

Campbell Harvey, a Duke University professor of finance who originated the idea of the inverted yield curve as a leading indicator, told CNBC on Friday that it has predicted eight out of the last eight recessions going back to the 1960s without any false positives.

It has been flashing for about 20 months, and the continued absence of a recession in that time has raised doubts about its accuracy. But Harvey said the lead time has historically ranged from six to 23 months.

Meanwhile, the inverted yield curve has recently changed to become a “causal mechanism” that can slow economic growth, he added.

“So people see an inverted yield curve, it changes their behavior,” he said. “So as a CEO, when you see an inverted yield curve, you’re just less likely to pull the trigger on a bet-the-farm type of investment.”

The Federal Reserve’s aggressive tightening caused the yield curve to invert and needs to undo the damage by cutting rates aggressively too, Harvey said.

To be sure, Fed rate hikes have helped bring consumer inflation down from 9.1% in mid-2022 to just 2.9% in the latest reading, the lowest annual rate in three years. But in the process, the economy has cooled off.

Given the inverted yield curve’s strong track record and ability to change behavior, it can also be used to help manage risk, meaning companies will be ready if a recession arrives later this year or early next year, Harvey explained.

Otherwise, a recession that takes companies by surprise will force them to suddenly slash their payrolls, worsening a downturn.

“So think of this indicator as actually slowing economic growth but leading to a situation where we can have a downturn without a hard landing,” he added. “So slower growth rather than something like the Global Financial Crisis.”

Recession fears eased over the past week after a weak payroll report initially set off alarms, but concerns continue to linger. For instance, gold prices have set fresh record highs, due in part to worries about the economy.

And “Black Swan” investor Mark Spitznagel, founder and CIO of the private hedge fund Universa Investments, told Fortune that a recession is coming this year as the biggest market bubble in history will soon pop.

“It’s not different this time, and anybody who says it is really isn’t paying attention,” he said, adding “the only difference is the magnitude of this bubble that’s popping is bigger than we’ve ever seen.”

Recommended Newsletter: CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about–and from inside–the C-suite. Subscribe Now.

Credit: Source link

ShareTweetSendSharePin
Previous Post

MLB umpire James Hoye wears Kramer shirt during Braves-Angels game

Next Post

Yankees call up Jasson Dominguez for first time this season

Related Posts

Morgan Stanley exec, entrepreneur’s teen daughter missing after tornado at sea
Business

Morgan Stanley exec, entrepreneur’s teen daughter missing after tornado at sea

August 20, 2024
Millennial says hiring manager asked her to change out of shorts
Business

Millennial says hiring manager asked her to change out of shorts

August 19, 2024
Carl Icahn and Icahn Enterprises fined  million over secret personal loans secured with company stock
Business

Carl Icahn and Icahn Enterprises fined $2 million over secret personal loans secured with company stock

August 19, 2024
Peter Thiel tells Joe Rogan his next move is either to Nashville or Miami to avoid California taxes
Business

Peter Thiel tells Joe Rogan his next move is either to Nashville or Miami to avoid California taxes

August 19, 2024
How Zurich Insurance is prioritizing Gen Z with TikTok and Instagram
Business

How Zurich Insurance is prioritizing Gen Z with TikTok and Instagram

August 19, 2024
Amex is using Olivia Rodrigo concerts to tap Gen Zers in Europe
Business

Amex is using Olivia Rodrigo concerts to tap Gen Zers in Europe

August 19, 2024
Next Post
Yankees call up Jasson Dominguez for first time this season

Yankees call up Jasson Dominguez for first time this season

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What's New Here!

Digital Therapeutics Alliance CEO joins FDA Digital Health Advisory Committee and more digital health news

Digital Therapeutics Alliance CEO joins FDA Digital Health Advisory Committee and more digital health news

August 5, 2024
A’ja Wilson calls Kahleah Copper ‘that bitch’ after Olympic heroics

A’ja Wilson calls Kahleah Copper ‘that bitch’ after Olympic heroics

August 11, 2024
How to watch, stream Simone Biles and Day Ten of the 2024 Olympics free without cable

How to watch, stream Simone Biles and Day Ten of the 2024 Olympics free without cable

August 5, 2024
AAK USA Appoints Joe Campbell as Vice President, Go To Market

AAK USA Appoints Joe Campbell as Vice President, Go To Market

July 26, 2024
Fresh Hemp Foods Ltd Expands Snack and Health Food Offerings To Include The Humble Seed, Seed-Based Crackers

Fresh Hemp Foods Ltd Expands Snack and Health Food Offerings To Include The Humble Seed, Seed-Based Crackers

July 26, 2024
Jeffrey Schmid, Kansas City Fed president, says labor market healthy

Jeffrey Schmid, Kansas City Fed president, says labor market healthy

August 9, 2024
China’s bond market intervention reveals financial stability worries

China’s bond market intervention reveals financial stability worries

August 15, 2024

About

World Tribune is an online news portal that shares the latest news on world, business, health, tech, sports, and related topics.

Follow us

Recent Posts

  • Mets’ season will be defined by this 10-game gauntlet
  • Consensus raises $11.5M for AI research engine for scientific papers
  • Morgan Stanley exec, entrepreneur’s teen daughter missing after tornado at sea
  • The handcuff running back to embrace, avoid

Newslatter

Loading
  • Submit Your Content
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2024 World Tribune - All Rights Reserved!

No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food

© 2024 World Tribune - All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In