Are we heading for a recession? The answer is undoubtedly: yes. Economic cycles do not continue ad infinitum, the business cycle has not been abolished, and the U.S. economy will—eventually—dip back into a recession. The more relevant question then is, of course, when? With financial markets once again starting to get a little jittery, huge demand for negative yielding German bunds, and with at least part of the Treasury yield curve inverting, the possibility of recession is once again at the forefront of investors’ minds. In this week’s Economics Weekly we examine the recession probability.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.