{"id":7997,"date":"2019-04-10T19:29:01","date_gmt":"2019-04-10T19:29:01","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=7997"},"modified":"2022-02-26T13:07:19","modified_gmt":"2022-02-26T13:07:19","slug":"are-the-signs-pointing-toward-a-recession","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/are-the-signs-pointing-toward-a-recession\/","title":{"rendered":"Are the signs pointing toward a recession?"},"content":{"rendered":"\n

What Recession\nIndicators are Telling Us<\/strong><\/p>\n\n\n\n

Investors were legitimately spooked in March, as a few of\nthe most influential recession indicators were flashing SLOWDOWN.<\/p>\n\n\n\n

1) The Yield Curve:<\/strong><\/p>\n\n\n\n

With the exception of a single instance, an inverted yield\ncurve has preceded each U.S. recession in the last 50 years. On March 22, the\nyield curve inverted for the first time since mid-2007 (which, we needn\u2019t\nremind investors, was just before the biggest recession in a generation.)1<\/sup>\n<\/p>\n\n\n\n

This most recent yield curve inversion was likely the result\nof a few factors, from the Fed\u2019s 2018 interest rate increases, to low inflation\nexpectations (based on slowing global growth), to investors seeking out U.S.\nTreasuries as safe havens and as sources of yield, particularly as Brexit woes\ncontinue and German bond yields recently turned negative. In fact, I would\nargue that the European Central Bank\u2019s continued efforts to stimulate the\nEuropean economy has played a not-insignificant in the current state of the US\nyield curve. <\/p>\n\n\n\n

Even still, as you can see from the chart below, the yield\ncurve has been flattening over several years, arguably as the expansion loses\nsteam and as an inevitable end to the business cycle approaches:<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Source: U.S. Department of the Treasury<\/em><\/strong><\/p>\n\n\n\n

On balance, however, it\u2019s also important for readers to note that an\ninverted yield curve does not always <\/em>result\nin a recession, and we believe the current yield curve inversion looks more\nlike a \u201cU-shaped\u201d curve (see red line in the chart) than an inverted one, which\ndistinguishes it even further from \u2018traditionally\u2019 inverted yield curves of the\npast. <\/p>\n\n\n\n

_____________________________________________________________________________<\/strong><\/p>\n\n\n\n

Are You Prepared for a Potential Recession?<\/a><\/strong><\/p>\n\n\n\n

When preparing your investments for a potential\nrecession, it is important to keep an eye on key economic indicators like the\nyield curve. To help you do this, we are offering all readers a first-look into\nour just-released April 2019 Stock Market Outlook report.<\/p>\n\n\n\n

This report\nwill provide you with our forecasts along with additional factors to consider:<\/p>\n\n\n\n