The U.S. Economy Keeps Defying the Recession Odds

It’s impressive how well the U.S. economy has held up during the past year. As early as 2018, leading indicators were suggesting a heightened risk of recession in 2019 or 2020. Then early this year the yield curve inverted, a traditional signal that recession is imminent (the inversion has since reversed, but this typically happens before growth actually goes negative). The trigger for a downturn wouldn’t be hard to identify -- a slowing China, combined with President Donald Trump’s trade war. Already, countries such as Singapore and South Korea, which export lots of manufactured goods to China, are slowing down.

But despite all the pieces that seem to be in place for a recession, it hasn’t happened. This expansion is now the longest in postwar history, having recently surpassed the long boom of the 1990s. Unemployment remains low and the prime-age employment-population ratio -- a better indicator of labor-market strength -- continues to increase: