Arturo Estrella has a message for recession naysayers: It could hit sooner than you think.
"It's been 50 years and 7 recessions with a perfect record," Estrella says. "It's impossible to be 100% sure about the future but I'd say the chances of a recession in the second half next year are pretty high."
This bond market phenomenon has been a reliable recession indicator as inversions of that part of the curve have preceded every recession over the past 50 years.Arturo Estrella, the economist who first discovered the predictive power of the yield curve, has a message for recession naysayers: It could hit sooner than you think.Ron Insana
Estrella was professor of economics at Rensselaer Polytechnic Institute and former New York Federal Reserve economist. Working at the Fed, Estrella studied the spread between the 10-year Treasury note and the 3-month Treasury bill as a recession predictor and found that particular part of the curve was the most accurate. It dipped below zero this year and is still inverted.
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