Analysis of factors that herald an economic crisis

Essential 6 indicators to know when a recession could be coming
Most experts say there’s no need to panic just yet, but there are a number of datasets we need to watch to help signal future economic shocks. They’re generally referred to as “indicators,” and they’re what experts read when trying to spot-check the health of the national economy.
Every week, a variety of these statistics are released. Though there’s no best indicator to follow, some are more widely watched than others. Here’s a breakdown of the indicators that consumers should keep an eye on, according to experts.

1. 
   Yield curve
   

A warning signals
The 3-month Treasury rate topped the 10-year yield on March 22 for the first time since 2007, but it soon recovered. Now, however, the curve is inverted again, with the spread 32-basis-points wide.

One of the most closely watched indicators of an impending recession is the “yield curve.”

A yield is simply the interest rate on a bond, or Treasury. These Treasuries have differing lengths of duration, known as their maturity. Some bonds last one month; some last 30 years. The curve, therefore, compares how those interest rates change over time. Typically, the interest rate – how the U.S. government issuing these securities compensates investors for risks – is higher on a bond with a longer maturity. There are two main yield curves that investors follow for their predictive power: the 10-year and three-month Treasury rate, and the two-year and 10-year Treasury yield.

Yield curve flashes recession warning

The 2-year, 10-year yield curve inverted Aug. 14 for the first time since the financial crisis.

The 10-year, three-month spread inverted on March 22 for the first time since 2007, but it soon recovered. On May 23, however, the spread inverted again, and it’s stayed that way since (though briefly reverting on July 23). The two-year, 10-year curve, a spread that financial markets take even more seriously, inverted on Aug. 13 for the first time since 2007, with the two-year yield surpassing the 10-year yield by one basis point.

Meanwhile, the 30-year Treasury on Aug. 14 reached an all-time low of 2.053 percent, on fears about a sustained economic slowdown.

2.