US economic recession prediction
The indicator (10 year US treasury yield-2 year US treasury yield) hits zero for the second times recently. That is when short-term interest rates exceed long-term rates. The technical name is called the yield curve inversion.
The significance of this phenomenon is that the US economy is expected to be in a recession in the next 6-12 months.
This indicator has been a very accurate predictor of US economic recession in the past since 1978. The graph below is the history of the recession periods in gray, the blue line is the indicator. You can see when ever it hits zero percent, an economic recession will follow after 6-12 months.The most recent one is during the COVID outbreak in early 2020. The longest recession was the Global Financial Crisis in 2009.
Since the US economy in GDP is the largest in the world, when it is in a recession it will affect many nations' economy. In the past, Australia had been cushioned by influx of Chinese tourists, Chinese students and investment, but COVID 19 has stopped most of these income streams.
However, the only sector a recession will benefit is property rental, as more people incline to rent rather than buy properties.
So, sit tight for this one. It might be worse than before because of the high inflation and COVID is still lingering. Save some money for the bad economic weather.
