The Economist Who Invented the Yield Curve Recession Indicator Says It Differently This Time


Economist Campbell Harvey wrote his doctoral dissertation at the University of Chicago several decades ago on the shape of the bond yield curve related to the trajectory of US economic activity.

i.e. US recessions have been preceded by an inverted yield curve

  • i.e. when short-term rates exceed those of longer-term rates (this is the main thing)

This time though…

  • “My yield curve indicator has turned red, and it’s 8 to 8 in predicting recessions since 1968 – with no false alarms,”
  • “I have reason to believe, however, that he is sending a false signal.”

Harvey outlines his reasoning here in the article.

Harvey was speaking in an interview on Tuesday.

Harvey is a professor at the Fuqua School of Business at Duke University.


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