Parsing Recession Risk Is Not Always Straightforward

Trying to handicap economic moves has become a popular, yet whipsawn, source of entertainment, at least among fiscal pundits and the media. But few things are a given and it can be tough to know the ultimate direction when things are moving fast.

And so, there’s particular attention to portents like yield curve inversion or whether there is negative GDP growth for two quarters running. But these are at best rough rules-of-thumb and not definitive. The National Bureau of Economic Research, which is the non-profit that makes the official call on US recessions, explicitly says that there are multiple factors that come into play and no single one is definitive.