More Mixed Signals on the Recession Question

Is a recession in the offing? Two economic indicators point in opposite directions on that much-debated question.

On the one hand, there’s the difference between the yield on the 2- and 10-year Treasury notes, which is the widest it’s been in four decades. That, Business Insider reports, is a major warning of a recession on the horizon and a possible sign of more losses in store for stock prices, according to DataTrek.

Recession fears have been ramping up in some quarters due to the Federal Reserve’s moves to raise interest rates by 425 basis points last year to dampen inflation. While prices have cooled some from last summer’s highs, some observers fear that raising rates past their current level will push the economy into a recession.

On the other hand, Business Insider also reports the latest U.S. jobs report could bolster the chances that the country will avoid a recession this year, as the data shows most companies aren’t laying off workers, the top economist at Moody’s Analytics said.

“The deeper I look into the bowels of last week’s job market data, the more I think we can skirt a recession,” Mark Zandi, economist at Moody’s Analytics tweeted. “That’s because businesses aren’t laying off workers and unemployment is at a half-century low; but regardless, job market slack is forming and wage pressures are abating.”