Without other catalysts such as escalating trade war or central bank over-tightening monetary policy, inverted yield curves do not and have not caused recessions. This requires repeating, inverted yield curves do not cause recessions.

An inverted yield curve can be a signal of a future economic downturn and recession; and, it can be a contributing factor to a downturn or recession if it creates fear and uncertainty that causes consumers to stop spending and/or financial institutions to stop lending.

Thus, the question being asked by investors is…”will there be a recession hitting the U.S. economy in the next twelve to eighteen months”? The answer is that no one knows for certain, but unlikely as long as the consumer remains strong. A second question investors are asking is whether there will be a recession in the next five to ten years? Answer…almost certainly, but, again, no one can say for sure.

The U.S. consumer remains strong and they drive 65% to 70% of the U.S. economy. The labor market also remains strong with unemployment at the lowest rate in over fifty years. Additionally, wages are increasing. Most economists concur that as long as the consumer remains strong and spending, it unlikely the economy will enter into recession.