Yield Curve Flashes Recession Warning, But Reasons for Optimism Remain
• The yield curve has inverted, predicting every recession since 1966. This signals investors expect rate cuts due to economic weakness.
• The Sahm rule says a 0.5 pp increase in unemployment over 12 months predicts a recession. We're nearing the threshold now.
• Reasons we could avoid a recession longest yield curve inversion without a recession, low unemployment rate, AI boom, rising consumer sentiment.
• Recessions are normal economic cycles. Stocks historically recover from them.
• Keep investing with confidence despite recession predictions. Markets recover from downturns.