Network officials also said voters should expect more of a Koch focus on grassroots activism throughout the 2020 election cycle.Politicsread more
In a room full of avowed capitalists, policies that sound to some like socialism are bound not to go over well.Delivering Alpharead more
GM's usage of temporary workers, potential closure of plants and health care contributions remain major sticking points, according to people familiar with the talks.Autosread more
Republicans and Democrats have long since separated themselves by ideology, leaving each more uniformly conservative or liberal than ever. And now a new data analysis by the...Politicsread more
A Missouri man died of vaping-related illness, officials announced Thursday.Health and Scienceread more
At least in terms of monetary policy, Pence says should be taking after other regions who keep their benchmark interest rates near zero.Delivering Alpharead more
AT&T isn't focused on selling or divesting DirecTV, despite pressure from stakeholder Elliott Management, sources tell CNBC.Technologyread more
Patrick Shyu, a former tech lead at Google, has posted a series of videos making fun of Facebook, where he worked as a software engineer until last month.Technologyread more
The measure to keep the government running through Nov. 21 now heads to the Senate, where McConnell has signaled he will back a temporary spending plan.Politicsread more
Amazon's purchase comes as part of its plan to convert its delivery fleet to 100% renewable energy by 2030. The e-commerce retailer already runs 40% of its fleet on renewable...Autosread more
As part of the plan, Amazon has agreed to purchase 100,000 electric delivery vans from vehicle manufacturer Rivian.Technologyread more
Yes, this is another story about the dreaded yield curve.
Late last week, the St. Louis Fed weighed in on the topic, examining why economic recessions tend to follow periods when short-term interest rates spike higher than longer-term rates along a continuum of interest rates called the yield curve.
This phenomenon is what bond experts call an inversion. And lately, it's been getting dangerously close to being reality.
The St. Louis Fed concluded that the present growth rate of about 1 percent year over year is lower than the historical average of 2 percent, raising the risk that a negative shock could put the economy into recession.
Inversions have preceded economic recessions in the U.S. since at least the 1960s. But the St. Louis Fed wondered in a research note whether an inversion forecast recession or whether it forecast the economic conditions that make recession more likely.
As the St. Louis Fed pointed out, real interest rates reflect expectations for consumption, which drives the U.S. economy. A higher rate on the 10-year Treasury compared to the 1-year Treasury is an indicator that growth will accelerate. But when that flips, economic growth is expected to slow.
Source: Federal Reserve Bank of St. Louis
But even strong economies experience adverse events, like a market downturn or an oil price shock. And economies sometimes grow unevenly. Recession is more likely when the adverse events hit an economy at a point when it is low-growth as opposed to high-growth, the St. Louis Fed said.
It pointed to three periods in the recent past when the difference between short and long-term rates narrowed or flipped, and then looked at what happened next. After 1988-89, the economy dipped into recession in 1990, but more likely because Iraq's invasion of Kuwait caused oil prices to spike. The recessions of 2001 and 2007-09 were caused by the collapse of asset prices.
"It seems unlikely that the timing of these events could be forecasted with precision," the St. Louis Fed said.
When consumption is slowing, economies are more vulnerable to "negative" shocks that turn into recessions. "While the exact date at which the shock arrives is itself unpredictable, the likelihood of recession is higher relative to a high-real-interest-rate, high-growth economy."