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Originally Posted by opendoor
Probably, yeah. Though on average it seems to take about 1.5 years from the start of a yield curve inversion to the beginning of a recession and we're only a month or so into the 10-2 inversion. So I don't know that it's necessarily a good predictor of whether the US is currently in a recession.
If unemployment stays low and GDP starts increasing again, they're not going to have to lean on the NBER to declare anything because the current situation almost surely won't meet their standard for a recession.
And while the NBER's official declaration is certainly more backwards looking, I don't think there's a strong case to be made right now that the US is already months into a recession based on the data. Employment levels, industrial production, and manufacturing have all still been increasing through the first 7 months of 2022. Without fail, those things all begin to drop soon after the beginning of a recession.
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The 10-2 first inverted in April, then came back, and is now very deeply inverted. I think a big factor in all those other indicators is inflation starting up. That makes market participants think things like, "maybe I have pricing power" or "my sales are growing" even when that isn't true in real terms. Wealth effects from inflation hitting the stock/real estate markets are probably also a factor. But inflation is bad for consumer/business confidence in the long term, even though it tends to accelerate spending in the short term as people anticipate rising prices in the future.
Anyway, the bond market is either really, really wrong or the Fed is going to lower rates again immediately after this hiking cycle. Maybe the market just doesn't trust the Fed to fight inflation, but I think a recession (either now or within the next ~1 year) is a near certainty. The Fed/Treasury are trying to cause a recession to fight inflation, but don't want to say that because it would be unpopular and would probably affect the mid terms.