That’s up from 9.9% in May and 7.1% in April from the monthly Cleveland Fed analysis of yield curve spreads. It also projects 1.0% real GDP growth over the next year, much less than the consensus forecasts of just under 3%. An inverted yield curve has preceded each of the last seven recessions by about a year, but there have been two false positives, in 1995 and in 1998. How much predictive power yield curve analysis has is in dispute among economists, as the Cleveland Fed notes here.
Affiliation: Davis Capital Investment Ideas
Pete Davis advises Wall Street money managers on Washington policy developments that affect the financial markets. President of his own consulting firm since 1992, Davis Capital Investment Ideas, he draws on 11 years of experience as a Capitol Hill economist with the Joint Committee on Taxation (1974-1981), the Senate Budget Committee (1981-1983), and Senator Robert C. Byrd (1992). He worked in the House and Senate, and for Republicans and Democrats.
Davis brought the first computer policy model, the Treasury Individual Income Tax Model, to Capitol Hill in early 1974, when he became a revenue estimator on the Joint Committee on Taxation. He formulated the 1975 rebate, the earned income tax credit, the 1976 estate tax rates, the 1978 marginal tax rates, and the Roth-Kemp tax cut. He left Capitol Hill in 1983 for the Washington Research Office of Prudential-Bache Securities, where he advised investors for seven years.
Davis has long written a newsletter on the Washington-Wall Street connection for his clients; Capital Gains and Games is his first foray into the blogosphere.
Visit: Capital Gains and Games