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Economic Perspectives

Despite Yield-Curve Inversions, Recession Appears a Long Way Off

Authored by Brian Jones, FHLBNY Financial Economist


September 10, 2019

  • Inverted portions of the Treasury yield curve have heightened fears of impending recession
  • Risk of recession based on yield curve growing; negative rates abroad contributing to inversion
  • Yield curve inversions by themselves do not cause business cycle downturns
  • Inventory overhang and commodity price shock absent
  • Monetary and fiscal policy to become more accommodative
  • Financial conditions offer few hints of an impending downturn
  • Labor market conditions show no signs of deteriorating

Even before it became the longest expansion in U.S. history in July, the longevity of the current business cycle upturn prompted market participants and commentators to look for signs of its impending demise. With real business activity ambling along at an above-trend pace…

Disclaimer. The Federal Home Loan Bank of New York (“FHLBNY”) is providing this report for informational purposes only. This report should not be construed as an opinion, recommendation, or solicitation regarding the use of any financial strategy and/or the purchase or sale of any financial instrument. The recipients of this report are advised to conduct their own independent due diligence and consult with financial advisors, accountants, and attorneys before making any investment, credit, or any other financial decisions. FHLBNY does not warrant the completeness or accuracy of this report. The past performance of any FHLBNY service or product should not be viewed as a guarantee of future results. The information contained in this report, as well as the services and products provided by the FHLBNY, may change at any time without notice.

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