by Robert Romono The Atlanta Federal Reserve on March 3 has again issued its GDP Now projection, finding the U.S. economy could be contracting at an inflation-adjusted, annualized 2.8 percent rate for the first quarter of 2025. That is down further from its Feb. 28 projection of negative 1.5 percent. But this was a long time coming, with red lights flashing since 2022 as inflation overheated the U.S. economy amid a slowdown of global production following Covid and trillions of dollars of monetary and fiscal stimulus. One such reliable recession measure, the spread between 10-year treasuries and 2-year treasuries, has shown inversions — the 10-year interest rate goes lower than the 2-year rate and then stays there for a period of time as investors begin hedging against risk by locking higher long term rates — in each of the last six recessions. In 1978, the 10-year, 2-year spread inverted, foretelling the 1980 recession, in 1980 predicting the 1981-1982 recession, in 1989 before the 1990-1991 recession, in 2000 before the 2001 recession, in 2006 before the 2008-2009 recession and even in 2019 before the 2020 Covid recession. It’s like clockwork. Sometimes there’s a head-fake, for example, a brief inversion in 1998 did…
Read the full storyAnalysis: Trump Administration Looks to Buck History as Treasury Inversions Predict Economic Pain for 2025
