2019-09-19 15:30:00 Thu ET
federal reserve monetary policy treasury dollar employment inflation interest rate exchange rate macrofinance recession systemic risk economic growth central bank fomc greenback forward guidance euro capital global financial cycle credit cycle yield curve
U.S. yield curve inversion can be a sign but not a root cause of the next economic recession. Treasury yield curve inversion helps predict each of the U.S. recessions since the 1970s. However, no fundamental reason can help explain whether this inversion causes each recession. Correlation may not imply causation.
Many stock market analysts focus on the 3 root causes of an economic recession. First, the monetary authority tends to institute interest rate hikes to better contain inflation or money supply growth. A sustainable series of interest rate hikes help prevent macroeconomic instability; otherwise, high inflation would become a major source of economic disturbance.
Second, key energy prices often increase substantially in the dawn of an economic recession. Oil and natural gas prices tend to fluctuate due to geopolitical risks and military confrontations.
Third, stock market analysts would expect to see high unemployment, low capital investment, and low industrial production several months before a major recession. In this key alternative scenario, subpar labor and capital productivity can cause the economy to slide into at least 2 consecutive quarters of negative real GDP growth. Whether Treasury yield curve inversion serves as a sign but not a root cause of the next economic recession remains open to controversy.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2018-08-19 10:34:00 Sunday ET
The World Economic Forum warns that artificial intelligence may destabilize the financial system. Artificial intelligence poses at least a trifecta of major
2019-05-19 19:31:00 Sunday ET
MIT professor and co-author Daron Acemoglu suggests that economic prosperity comes from high-wage job creation. Progressive tax redistribution cannot achiev
2018-07-09 09:39:00 Monday ET
The Federal Reserve raises the interest rate again in mid-2018 in response to 2% inflation and wage growth. The current neutral interest rate hike neither b
2019-01-15 13:35:00 Tuesday ET
Americans continue to keep their financial New Year resolutions. First, Americans should save more money. Everyone needs a budget to ensure that key paychec
2019-12-25 19:46:00 Wednesday ET
Former White House chief economic advisor Nouriel Roubini discusses the major limits of central-bank-driven fiscal deficits. The International Monetary Fund
2023-12-09 08:28:00 Saturday ET
International trade, immigration, and elite-mass conflict The elite model portrays public policy as a reflection of the interests and values of elites. I