Recession Signals: The Yield Curve vs. Unemployment Rate Troughs

Kevin Kliesen

Economic Synopses, 2018, issue 16, 3 pages

Abstract: In early May 2018, The Wall Street Journal asked professional forecasters to predict when the next recession would begin. Nearly 6 in 10 answered that the next recession will begin sometime in 2020. If so, the current business expansion will have eclipsed the 1991-2001 expansion as the longest on record. Economists and policymakers look at several leading indicators when attempting to predict a slowdown or outright contraction in economic activity. Two stand out: the slope of the yield curve and the direction of the unemployment rate. The purpose of this essay is to ascertain the predictive power of these two economic indicators.

Date: 2018
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DOI: 10.20955/es.2018.16

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