The thought of a recession probably isn’t at the forefront of your mind. And why should it be? For many, even just the word “recession” sets off all kinds of alarm bells in their head. But it’s important to be aware of the potential for another recession — regardless of how it compares to 2008.
On Monday, Charles talked a time-tested recession indicator: the inverted yield curve.
Many economists claim that this time is different and there won’t be a recession since the economy has been relatively healthy, ignoring the signs of an economic slowdown.
Charles sees it differently. The yield curve has twisted and is flattening out. This happens when short-term rates rise and long-term rates fall, and it doesn’t bode well for the economic outlook.
It’s a point worth noting. After all, it’s your money and well-being at risk.
There are other indicators beyond the one that Charles reviews.
One involves looking up at the city skyline and taking notice of how many high-rise crane are in operation; aptly called the crane indicator. In a way, its an immediate visual snapshot of how the economy may be holding up, though on a smaller, more localized level. If you dig deeper into it, you’ll see how it affects labor, which then ripples out to other areas of the economy.
And there are other indicators that claim to tell you how the economy is doing, whether or not a recession is coming. You can read about them all here.
Charles’ advice? Stick to the indicators that have historical data to support it.