But those events dont mean that a recession will take place tomorrow.
It may not even take place next month, in the next six months, or even next year.
Thats a sign of pessimism among investors, and its a reliable prediction of economic downturn.
The Three-Month Treasury yield curve inverted with the 10-Year yieldin Marchfor the first time since 2007.
Then on August 14, the yield on the 2-Year Treasury flipped with the yield on the 10-year Treasury.
Companies cut some of their employees.
If the unemployment rate goes up, its a signal that things arent looking great.
We still have a very low unemployment rate.
Its been decreasing ever since, and has been under 4% since January 2019.
But ongoing trade negotiations with China could have a long-term impact on employment.
Its often calculated by looking at consumer spending, business investment, and exports.
If that combined measure dips significantly, its bad news.
If the stock market dips over and over, on a near-daily basis, its a sign of trouble.
But the stock market is performing well overall.
Take the Dow Jones Industrial: It took a dive at the very end of 2018, but recovered.
A recession is simply a period of economic decline that lasts six months or more.
There was also a recession in July 1990, around the same time as the first Gulf War.
This post was originally published on 8/15/19 and was updated on 8/15/19 to include clarified language about bond yields.
