The International Forecaster | Telltale Recession Sign Flashing Red International Forecaster Weekly

The New York Fed’s recession probability tool has been predicting the likelihood of a recession for over 60 years. This tool measures the difference in yields between 3-month and 10-year Treasury bonds to forecast the chances of a recession in the upcoming year. A normal yield curve slopes upward and to the right, indicating that longer-term bonds have higher yields. When the economy is in trouble, the curve becomes inverted, with shorter-term bonds having higher yields. While an inversion doesn’t guarantee a recession, every recession since World War II has been preceded by an inversion. According to the latest recession-probability indicator, there’s a 68.22% chance the country will enter a recession over the next 12 months. The highest probability of a recession in 40 years has been noted. Money supply and bank lending are also indicators to watch, as a decline in M2 and bank lending retracements have led to three recessions and a deposit panic in the past. The Fed has warned of a mild recession forecast for later in the year. It’s important to note that historically, US stocks have lost most of their bear market losses after a recession has been officially declared.



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