Inverted Yield Curves and Recessions

Inverted Yield Curves and Recessions

Talk of an incoming recession has been published in every media outlet ever since the “inverted yield curve” phenomenon. The media has covered this crazed story dozens of times and will continue to feed Americans fear, as long as it sells. Recessions are normal in every developed economy. There are ups and downs, it is the cycle of life. However, becoming crazed and expecting a total catastrophe is unreasonable. According to Forbes, “The average length of a growing economy is 38.7 months or 3.2 years.” The last American recession ended in June 2009, which means we have been long overdue for a downturn. Our first indicator was in March 2019, when interest rates on long-term bonds were suddenly lower than the interest rates on short-term bonds, the inverted yield curve occurred. This meant that Americans were concerned about the near future and were betting on long-term investments. Usually, long-term bonds yield a higher rate of return than short term-bonds but when...
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