This Forecasting Tool Is Sending Its Strongest Warning Since the Great Recession. It Could Signal a Big Move in the Stock Market.
Many economists forecast a recession in 2023 as scorching inflation and rapidly rising interest rates threatened to choke the economy, but that downturn never materialized. In fact, the U.S. economy expanded 2.5% in 2023, an acceleration from 1.9% in 2022.
However, consumer spending and business investments slowed in the first quarter of 2024, such that U.S. economic growth slowed to 1.6%, much lower than the 2.5% growth analysts anticipated. Admittedly, many pundits still believe the U.S. will avoid a downturn. But stubborn inflation, elevated interest rates, and rising consumer debt undoubtedly pose a risk, and a few economic indicators are currently sounding a recession alarm.
For instance, the Treasury yield curve has been inverted since late 2022. The three-month Treasury bill currently pays a higher interest rate than the 10-year Treasury note, and the exact same inversion has preceded every recession since 1969 with zero false positives.
Source Fool.com
