Recession Signals?

Inverted Yield Curve- for web

Positioning Your Business for the Future

Published February 20, 2020

A Warning on the Horizon

If you follow the markets, we have had a decade of market growth and prosperity. Well-managed companies in the residential industry are profitable and have a solid book of business. Will we ever face another recession?

A warning sign appeared in January with a phenomenon we call the “Inverted Yield Curve.” This signal typically predicts a recession on the horizon within 12-24 months.

What is an “Inverted Yield Curve”?

This warning begins when the 10-year Treasury yield falls below the three-month Treasury bill yield. It has predicted every recession except for two in the last 60 years. See our previous work on the yield curve here.

The “Inversion” took place in late January. The Federal Reserve Bank already has created a low interest rate environment causing business expansion and increased corporate debt. Is this good news or bad news?

Should you borrow more funds today at historically lower rates? Longer-term rates have come down. The Fed could cut rates again. Housing demand looks steady as the market will be underbuilt for the next few years.


Read the Signs with Housing Tides

If you are looking to position your business for the future as early as 2022, you should closely monitor the economics that surround you. Many economic observers are skeptical that a recession is on the horizon.

In my next blog I will show you how Housing Tides™ can guide you in your predictions and planning. There are many indicators to give you clear insights.

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Jeff Whiton Housing Tides Research Team Member

About Jeff Whiton

Jeff formerly headed operations for Lennar and KB Home in Colorado building nearly two per cent of the state’s total single-family housing stock. He was honored as Colorado’s Home Builder of the Year in 2001. Whiton also served as the CEO of the Home Builders Association of Metro Denver for eight years reviving the association from near bankruptcy after the Great Recession.

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