United States: Moving Toward Economic Recession in 2019?

One could argue that in a world subject to the inevitability of business cycles, the United States is overdue for a recession. During the 60 year period from 1950 to 2010, the US economy experienced 10 recessions, averaging one recession every six years. In contrast, the longest period of uninterrupted economic growth was just shy of 10 years. The US is now in the midst of nine years of economic growth with the last "Great Recession", which ended in 2009, a fading memory for some. Will 2019 bring recession to the US?
  • With the potential exceptions of asset prices and the yield curve—now at its lowest level since the last recession—standard leading indicators of economic recession paint a picture of a relatively strong US economy.
  • Economists and investors have good cause, however, to reevaluate the predictive value of standard indicators based on the economic transformation and policy patterns of modern economies. For example, monetary policies, such as zero interest rates and quantitative easing, can distort the yield curve—the rate spread between 10-year Treasury bonds and 3-month Treasury bills—and potentially diminish the value of the spread as a stand-alone indicator of recession. 
  • Researchers globally continue to seek new indicators of economic strength. The Schwartz Center for Economic Policy Analysis has found the racial unemployment rate gaps are narrowest immediately preceding a recession, while researchers at the Central Bank of Norway have shown that residential investment has greater predictive value than stock returns, among other indicators. 
In today's Viz of the Day, we visualize some of the current standard economic indicators so that you can evaluate some of the same information used by policymakers and investors to estimate the health of the US economy. Interested in learning more about economic recessions globally? You may also enjoy, 40 Years in Financial Crises.


No comments:

Post a Comment