For the first time in over two years, the yield on the 10-year Treasury bond is higher than the yield on the 3-month Treasury bill.  This is the longest we have seen an inverted yield curve since at least the early 1980’s.

Every time this relationship has dis-inverted, there has been a recession in the US.  The time frame from when this occurred to the date of the declared recession has varied from 1 to 10 months.  The difference between the two yields when the recessions have started varies from .2% to 1%.  As of noon on December 19^th, the spread has jumped to +.25% because of the Feds .25% Fed Funds rate.

The problem with economic data is how long it takes for data from a certain period to be reported.  Often, we are informed of the official start of a recession well after it has begun, sometimes so much later that said recession is almost over.

Over the past two years we have seen a generalized slowing of growth in the US economy.  A recession would be negative growth, not simply slow growth.   Currently, employment is very healthy and spending by consumers is robust.  While this indicator has triggered, indicating a recession to begin sometime in 2025, we still need to wait for deterioration in these other areas to show us the more precise begin date.  Markets often make their last high and roll over many weeks or months prior to the start of a recession.

Given the strength of spending and employment, and the longer than usual slow decline in economic data points, it is possible that this too can take longer than we have seen in the past.