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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…

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