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Economist Says His Indicator That Predicted Eight US Recessions Is Wrong This Year

  • Harvey’s work showed link between curve inversion and growth
  • Strong labor demand, risk avoidance support US economy now
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Economist Campbell Harvey has had a winning track record since he showed in his dissertation at the University of Chicago decades ago that the shape of the bond yield curve was linked to the path of US economic activity.

US recessions have been preceded by an inverted yield curve — when short-term rates exceed those of longer tenors — since the late 1960s. Fast forward to 2023, that’s exactly what’s been happening with the Treasury yield curve in the past month and half. Yet, Harvey is saying this time the US economy will manage to avoid a real slump even though it will keep slowing down for a bit longer.