Recent economic indicators signal possible recession with an inverted yield curve and declining consumer confidence. The yield curve inversion, observed when the 10-year bond rate dips below the three-month Treasury rate, reflects market expectations of potential Federal Reserve rate cuts due to fears of economic slowdown. Consumer sentiment measures have shown sharp declines since early 2019, notably influenced by tariff threats. The University of Michigan and Conference Board's consumer confidence surveys indicated record lows, suggesting decreased household demand and business confidence amid global uncertainties.
If a US recession is land, the birds are already swooping into view. But these sightings offer no guarantees of what lies ahead, only probabilities.
An inverted yield curve, when the long-term interest rate falls to or below the short-term rate, is commonly considered to be a predictor of recession.
Consumer confidence is a more direct indicator particularly for predicting household demand, with sharp declines reported in March.
The Federal Reserve Bank of New York's survey indicates households' year-ahead expectations about their financial situations deteriorated in March.
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