#recession #deflation #inflation #retailsales #industrial #consumer
US Industrial Production fell for the second month in a row, dropping the Fed’s index below the same period a year ago. A negative yearly change in IP has accompanied all 18 of the economic contractions in the NBER’s library. Only six times in over a century has IP been negative on an annual basis without any full-scale recession.

Eurodollar University’s Money & Macro Analysis

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Jeffrey Snider (The Promoter) is acting as a promoter for an investment advisory firm, Atlas Financial Advisors, Inc. (AFA). Jeffrey Snider is affiliated with AFA as a promoter only and is not in any way giving investment advice or recommendations on behalf of AFA. The Promoter is being compensated by a fee arrangement: The Promoter will receive compensation on a quarterly basis, based on the increase in account openings that can be reasonably attributed to the Promoter’s activity. The Promoter will not be receiving a portion of any advisory fees. The Promoter has an incentive to recommend the Adviser because the Promoter is being compensated. The opinions expressed on this site and in these videos are those solely of Jeffrey Snider and Eurodollar University and do not represent those of AFA….(read more)

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Century-Old Recession Signal Triggered: Is Economic Downturn Looming?

In a grim turn of events, a recurring signal has flashed its warning signs, indicating the possibility of an impending economic recession. This signal, known as an inverted yield curve, occurs when long-term interest rates fall below short-term interest rates. With the latest inversion, experts are speculating whether we may be on the brink of a downturn akin to the Great Recession of 2008.

The inversion of the yield curve is considered significant because it has often foreshadowed economic recessions in the past. Notably, the yield curve inverted prior to every recession in the United States since the 1950s, with only one false alarm. However, the recent inversion is even more striking as it marks the first time in over a decade that this signal has occurred.

Historically, an inverted yield curve has put investors and economists on high alert due to its ability to predict economic contractions. The theory behind this signal is relatively simple: when long-term interest rates fall below short-term interest rates, it suggests a lack of investor confidence in long-term economic growth, indicating a potential recession on the horizon.

Critics argue that this signal may not be as reliable as it once was due to shifts in the global economy. Interest rates around the world have been kept historically low over the past decade, partly due to central bank policies intended to stimulate economic growth. These conditions have distorted the typical relationship between short-term and long-term rates, potentially undermining the accuracy of the inverted yield curve as a recession predictor.

Nonetheless, the inversion has already sent shockwaves throughout financial markets, causing significant volatility in stocks and bonds. Investors, wary of the economic implications, are flocking towards traditionally safer assets, such as government bonds, driving their prices up and yields down. Simultaneously, stock markets have experienced sharp drops, reflecting investor unease and uncertainty.

The current economic landscape adds to the concerns raised by the inverted yield curve. Trade tensions between major global economies, particularly the ongoing trade war between the United States and China, have introduced additional uncertainty and potential risks to the global economy. These tensions, combined with signs of a global economic slowdown, have heightened fears of an inevitable downturn.

However, it is important to note that while the inverted yield curve may be a strong historical recession signal, it is not foolproof. Economic indicators are complex, and recessions can occur without this specific warning sign. Furthermore, if policymakers and central banks intervene with supportive measures, such as interest rate cuts or fiscal stimulus, they may be able to mitigate the severity of any potential downturn.

The overall message here is caution. While an inverted yield curve has historically indicated an approaching recession, it is only one of many factors to consider when assessing the state of the economy. Investors and individuals should stay informed, remain vigilant, and be prepared for potential economic challenges. Although the future is uncertain, being aware of the signals and taking proactive steps can help mitigate the potential impact of any looming downturn.