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Economic Brief

Dec. 13, 2019

Richmond Fed Researchers Evaluate Recession Indicators

The Richmond Fed’s latest Economic Brief concludes that the spread between three-month and 10-year Treasury securities has demonstrated significant value in predicting recessions.

Earlier this year, many analysts expressed concern when three-month Treasury yields rose above 10-year Treasury yields. This “yield curve inversion” often has preceded recessions. In response, Richmond Fed researchers examined how well Treasury yields and other indicators have predicted recessions during the past 60 years. They found that while a number of indicators have demonstrated value in predicting recessions, two stand out. The Conference Board Leading Economic Index has worked well at short-term recession forecasts, while Treasury yields have worked well at longer-term forecasts. Also, the researchers found additional value in combining the two indicators.

The Richmond Fed’s Economic Brief series provides web-exclusive essays on economic issues and trends. Sign up to receive an email notification when a new essay is posted.


As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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