On March 3, the three-month T-bill yielded 1.13%, and the 10-year T-note yielded 1.1%. The yield curve inverted multiple times in 2019 and early 2020. This indicator worked for the Pandemic Recession too. curve has inverted before each recession in the past 50 years, with just one false signal. This indicates that bond traders expect weaker growth in the future. More than the stock market, consumer confidence or the index of leading economic indicators, an inverted yield curve has been a solid predictor of economic downturns.Īn inverted yield curve is when short-term government securities, such as the three-month Treasury bill, yield more than the 10-year Treasury bond. The recession lasted two months, which makes it the shortest US recession on record.'

The previous peak in economic activity occurred in February 2020. In the case of the Pandemic Recession, NBER says: 'The committee has determined that a trough in monthly economic activity occurred in the US economy in April 2020. Prolonged declines in production, employment, real income and other indicators also contribute to the NBER's recession call. Other signs of recession include declines in real (inflation-adjusted) manufacturing and wholesale-retail trade sales and industrial production. In fact, GDP is not the committee's favorite indicator: It prefers indicators of domestic production and employment instead. Someone has to be the official arbiter of recessions and recoveries, and the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) is that someone.Īlthough two quarters of consecutive GDP contraction is the standard shorthand for a recession, the NBER actually uses many indicators to determine the start and end of a recession. Here are 10 must-know facts about recessions. Thus, the more you know about recessions, the better. And if you're prepared for the next recession, there will be plenty of opportunities when that downturn ends. Recessions are parts of the warp and woof of a dynamic economy, albeit unpleasant ones. People fear recessions because they can mean lower home prices, lower stock prices – and, of course, unemployment.Īny number of things can cause, or exacerbate, a recession: an exogenous shock, such as the COVID-19 crisis or the Arab oil embargo of 1973 soaring interest rates or ill-conceived legislation, such as the Smoot-Hawley Tariff Act of 1930. After all, a recession is the scariest creature in the average investor's closet of anxieties. history, it took the economy until July 2022 to recover the 21 million jobs lost during the slump.Īnd it continues to haunt us in other ways. The Pandemic Recession that began in February 2020 ended in April of 2020, according to the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), which is the arbiter of these things.Īlthough it was the shortest downturn in U.S. But given that our last recession ended only a bit more than two years ago, investors may be forgiven if they feel like it's way too soon for another downturn. Only time will tell if we are indeed in an official contraction. Two consecutive quarters of negative GDP readings have sparked a heated debate about whether the U.S.

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