This recession indicator may be a 'broken odometer for the economy,' expert says. Where forecasts stand now

2023-09-05 19:19:04  • 4 mins

Key Points

  • A recent survey of economists shows they are divided as to whether an inverted yield curve, often seen as a recession predictor, points to a downturn.
  • As Wall Street firms reduce their predictions of the chance of a recession, here's why forecasts may be different this time.

Westend61 | Westend61 | Getty Images

Experts have been pointing to a coming downturn for the U.S. economy. The question was when.

Now, however, some firms and experts are walking back those predictions, calling into question the validity of once-trusted recession indicator known as the yield curve inversion.

"While it is true that the yield curve has predicted the past several recessions, in more recent experience it's been sort of a broken odometer for the economy," said Mervin Jebaraj, economic policy survey chair at the National Association for Business Economics.

In its latest survey of economists, NABE found more than two-thirds of respondents were at least somewhat confident the Federal Reserve can help the U.S. economy to a soft landing. Meanwhile, 20% believe the U.S. is either in a recession or will enter one in 2023.

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