Why Some Economists Are Ignoring Recession Signals
~5.0 mins read
To some top economists, previously reliable recession indicators are beginning to look like smoke detectors with dead batteries—blaring incessantly but not necessarily signaling any real danger.
The recession outlook has been on a roller coaster ride this month, with fears spiking early in the month and then receding as various reports on the health of the U.S. economy sent conflicting signals. Amid the whiplash, some economists are comfortable ignoring their traditional tools for predicting recessions, including the inverted yield curve and the Sahm Rule.
Forecasters have been questioning whether the U.S. economy will enter a recession since the recovery from the COVID-19 pandemic began. Those arguments got louder in 2021 when the economy accelerated and prices rose rapidly. Spiking inflation is usually followed, sooner or later, by a major economic slowdown.
Since then, inflation has slowed to near pre-pandemic levels, but the possibility of a recession remains. Because the current economic situation is so different from past recessions, economists find some of their old tools less useful as they enter uncharted territory.
The most persistent recession alarm comes from the bond market.
Ever since July 2022, the yield on 2-year treasury bonds has been higher than the yield on 10-year treasury bonds. In a healthy economy, it’s the other way around, with longer-term securities having higher yields than short-term ones. When investors believe a recession is ahead, that relationship is reversed, a condition called the inverted yield curve.Bond traders accept lower yields on longer-term debt when they think a recession is ahead for several reasons. One is that they believe the Federal Reserve will cut its benchmark interest rate in the future—and the Fed often cuts interest rates when the economy is in a recession.Indeed, Fed rate cuts are on the horizon. Fed Chair Jerome Powell said in a speech Friday that "the time has come for policy to adjust," as inflation continues to moderate and the labor market cools.
In March 2022, the Fed steadily hiked its influential fed funds rate from near zero. That has pushed up borrowing costs on mortgages, car loans, credit cards, and other debt in an effort to discourage borrowing and spending, slow the economy, and quash runaway inflation. In July 2023, the Fed raised the rate to its highest since 2001 and has held it there ever since.Since then, inflation has cooled nearly to pre-pandemic levels. If inflation slows down to the Fed’s goal of a 2% annual rate without an economic crash, that would be a historical rarity. Usually, when the Fed hikes interest rates to control inflation, a recession has followed. Still, it’s possible that bond investors are anticipating this “soft landing” rather than a recession.“Investors, as a group, aren’t buying into the U.S. recession story at this point,” Avery Shenfeld, an economist at CIBC, wrote in a commentary. “Instead, the market’s behavior is consistent with our view that rates are coming down because inflation has been vanquished and that an easing in policy would help avoid a true economic downturn.”
The CME Group’s FedWatch tool, which forecasts fed rate movements based on fed funds futures trading data, pegs the fed funds rate in the 3%-3.5% range by September 2025. In past recessions, the Fed has slashed the fed funds rate to near zero to spur the economy back to life with easy money.
Another formerly reliable indicator is the Sahm Rule, named after its creator, economist Claudia Sahm.
The rule is based on the observation that past recessions have been foreshadowed by a certain uptick in the unemployment rate that quickly snowballs into widespread job losses. An early-August report from the Department of Labor showed the unemployment rate rising just enough to trigger the Sahm Rule.
That’s bad news for the economy since the Sahm Rule has been accurate when applied to recessions over the last 50 years. But many economists, including Sahm herself, are skeptical that the economy has actually gone into a downturn.“We are not in a recession now—contrary the historical signal from the Sahm Rule—but the momentum is in that direction,” Sahm told CNBC earlier this month. “A recession is not inevitable, and there is substantial scope to reduce interest rates.”In past downturns, the unemployment rate has risen because businesses were laying people off. This time, the unemployment rate, which just measures how many job-seekers are out of work, has risen in part because more people are for jobs. It may also have been driven up temporarily by storms in July.Earlier this week, Jan Hatzius, chief economist at Goldman Sachs, dismissed the Sahm Rule’s relevance to the current situation when he cut his recession forecast to 20% at some point in the next year, down from 25%. He noted that several foreign countries, including Canada, have recently experienced significant upticks in their unemployment rates without their economies completely going down the tubes.
Not every expert agrees with these dismissive assessments.
Richard M. Salsman, an economist at the American Institute for Economic Research, a libertarian think tank, said that the persistent signal from the yield curve and the more recent warning from the Sahm Rule should be taken seriously.
“The two measures together are significant and telling,” Salsman wrote in a commentary this week. “First, we get the signal that another recession will arrive within 12-18 months, then we get the signal that says recession is imminent. The door knocks are getting harder and louder. Something’s out there.”
Financial markets are closely watching each new report for signs that one side or the other is correct. The S&P 500 stock index fell sharply in early August after a streak of indicators pointed to the economy slowing down. The market rallied over the next few weeks as reports on retail sales and inflation made a recession seem less likely.That whiplash could continue as long as the recession outlook stays murky. The Fed’s high interest rates have already had far-reaching impacts, including contributing to a surprising spate of bank failures last year, and still more shoes could drop before interest rates settle at a new normal.“The risk of recession will remain elevated until past rate hikes finally work their way through the economy,” Robert Fry, an independent forecaster, said in a commentary. “As long as that is true, markets will remain tense and will overreact to data that deviate from expectations.”
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Destiny, a concept that has fascinated humans for centuries, remains a topic of debate and intrigue. What is destiny, really? Is it a predetermined course of events, or a path we create through our choices and actions?
*Definition and Interpretations*
Destiny can be defined as the events that will necessarily occur in the future, or a person's future circumstances, which are believed to be predetermined by fate or a higher power. Different cultures, religions, and philosophies offer varying interpretations of destiny:
1. *Fate*: In ancient Greek mythology, the Moirai (Fates) controlled the thread of life, determining an individual's fate.
2. *Karma*: In Hinduism and Buddhism, an individual's actions in past lives influence their current circumstances and future outcomes.
3. *Predestination*: In some Christian traditions, God's plan for humanity is seen as predetermined, with individual lives unfolding according to His will.
*The Nature of Destiny*
While the concept of destiny can provide comfort and reassurance, it also raises questions about free will and personal responsibility:
1. *Determinism*: If destiny is predetermined, do we have control over our lives and choices?
2. *Free Will*: Can our decisions and actions change the course of our destiny?
3. *Personal Responsibility*: If our path is predetermined, are we accountable for our actions and their consequences?
*The Interplay between Destiny and Free Will*
A balanced perspective suggests that destiny and free will are interconnected:
1. *Guided Path*: Destiny may provide a general direction or framework for our lives, while free will allows us to make choices within that framework.
2. *Choices and Consequences*: Our decisions and actions influence the outcome of our destiny, shaping the journey and its ultimate destination.
3. *Co-Creation*: We co-create our destiny with a higher power or the universe, our choices and intentions contributing to the unfolding of events.
*Embracing Destiny*
Whether or not we believe in a predetermined destiny, we can:
1. *Trust in a Higher Plan*: Have faith that a larger purpose or design guides our lives.
2. *Make Informed Choices*: Exercise free will, making decisions that align with our values and goals.
3. *Cultivate Self-Awareness*: Develop an understanding of ourselves, our strengths, and our passions to navigate life's journey.
*Conclusion*
Destiny remains a mysterious and multifaceted concept, influenced by cultural, religious, and personal beliefs. By embracing the interplay between destiny and free will, we can:
1. *Find Purpose and Meaning*: Understand our place in the world and the direction of our lives.
2. *Take Personal Responsibility*: Acknowledge the impact of our choices and actions on our journey.
3. *Trust in a Higher Plan*: Have faith that a larger purpose guides us, even as we exercise free will.
Ultimately, the nature of destiny remains a deeply personal and philosophical question, inviting each of us to explore, reflect, and discover our own understanding.
Tonto Dikeh is a Nigerian actress, singer, and philanthropist. Here are 5 facts to know about her:
1. *Early Life and Education*: Tonto Dikeh was born on February 14, 1983, in Port Harcourt, Rivers State, Nigeria. She graduated from the Federal Polytechnic, Offa, with a degree in Electrical/Electronics Engineering.
2. *Acting Career*: Dikeh began her acting career in 2006 and has since appeared in numerous films, including "Bounce Back," "Assassination," and "The Gift."
3. *Music Career*: In 2012, Dikeh released her debut single, "Shake It," followed by "Bum Bum." Although her music career was met with criticism, she remains a prominent figure in the entertainment industry.
4. *Philanthropy*: Tonto Dikeh is a passionate advocate for women's rights and children's welfare. She founded the Tonto's Cares Foundation, which focuses on education, healthcare, and economic empowerment for vulnerable populations.
5. *Personal Life*: Dikeh was married to Oladunni Amukamara from 2014 to 2017 and has a son, King Adonai, from the marriage. She is known for her outspoken and flamboyant personality, often making headlines for her controversies and feuds with other celebrities.
Additional facts:
- Tonto Dikeh has received several awards and nominations for her acting and humanitarian work.
- She has been a brand ambassador for various companies, including a beauty and cosmetics line.
- Dikeh has been open about her struggles with depression and mental health, using her platform to raise awareness and reduce stigma.
Obi Cubana is a Nigerian businessman and entrepreneur, best known as the chairman of the Cubana Group, a hospitality and entertainment empire. Here are 5 facts to know about him:
1. _Early Life and Education_: Obi Cubana, born Nnamdi Obinna Cubana, hails from Anambra State, Nigeria. He graduated from the University of Nigeria, Nsukka, with a degree in Post Harvest Technology.
2. _Career_: Cubana began his career in 2001 as a sales representative for a construction company. He later ventured into the entertainment industry, opening his first nightclub in 2003.
3. _Cubana Group_: Under his leadership, the Cubana Group has expanded to include multiple businesses, such as nightclubs, hotels, and event centers, across Nigeria and abroad.
4. _Wealth and Philanthropy_: Obi Cubana's net worth is estimated to be over $100 million. He is known for his generosity, often sponsoring educational scholarships and supporting charitable causes.
5. _Personal Life_: Cubana is married to Nnamdi Cubana, and they have three children together. He is a close friend of other prominent Nigerian entrepreneurs and celebrities, often making headlines for his lavish lifestyle and high-profile events.
Additional facts:
- Obi Cubana has received several awards for his entrepreneurial achievements and philanthropic efforts.
- He is a strong advocate for youth empowerment and has mentored many young entrepreneurs.
- Cubana's extravagant lifestyle has sparked controversy, with some critics accusing him of displaying wealth excessively. However, he remains a respected figure in Nigerian business and entertainment circles.
Reno Omokri: A Profile Of Inquisitiveness And Controversy
~1.9 mins read
Reno Omokri: A Profile of Inquisitiveness and Controversy
Reno Omokri, a Nigerian author, politician, and former Special Assistant on New Media to President Goodluck Jonathan, is a man of many faces. His inquisitive nature and unapologetic stance on various issues have made him a prominent figure in Nigerian politics and public discourse.
*Early Life and Education*
Born on September 9, 1974, in Jos, Plateau State, Nigeria, Omokri's early life was marked by a strong desire for knowledge. He holds a Ph.D. in Theology from the University of California, a testament to his inquisitive nature and thirst for understanding.
*The Inquisitive Mind*
Omokri's inquisitiveness is evident in his writings and public statements. He has authored several books on politics, theology, and personal development, showcasing his ability to think critically and challenge conventional wisdom. His questions and comments often spark debates and discussions, making him a respected voice in Nigerian public life.
*Controversies and Criticisms*
Omokri's inquisitive nature has also led to controversies and criticisms. He has been involved in high-profile feuds with other politicians and has faced backlash for his outspoken comments on sensitive issues. However, he remains unapologetic, believing that his questions and critiques are essential for promoting accountability and good governance.
*Key Areas of Interest*
Omokri's inquisitiveness extends to various areas, including:
1. *Politics*: He is a strong advocate for good governance, transparency, and accountability in government.
2. *Theology*: Omokri's background in theology has informed his views on spirituality and the role of religion in society.
3. *Personal Development*: He believes in the importance of self-improvement and has written extensively on the subject.
*Impact and Legacy*
Reno Omokri's inquisitive nature has made him a significant figure in Nigerian politics and public discourse. His willingness to ask tough questions and challenge the status quo has inspired a new generation of leaders and thinkers. While controversies surround him, his legacy as a thought-provoking and courageous individual remains intact.
*Conclusion*
Reno Omokri's inquisitive mind and unapologetic stance on various issues have cemented his position as a respected and influential figure in Nigerian public life. As he continues to ask questions, spark debates, and challenge conventional wisdom, his impact on the nation's discourse will be felt for years to come.
*Recommendations*
1. *Engage with Omokri's writings*: Read his books and articles to understand his perspectives on politics, theology, and personal development.
2. *Follow him on social media*: Omokri's social media presence is a testament to his inquisitive nature, with thought-provoking comments and questions that spark debates.
3. *Participate in public discussions*: Join the conversations initiated by Omokri's inquisitive nature, and contribute to the nation's discourse on key issues.
Here Are 5 Of The Most Engaging Businesses Predicted For 2025 ¹:
~0.9 mins read
Here are 5 of the most engaging businesses predicted for 2025 ¹:
- *Generative AI*: This technology is expected to have a significant impact on businesses across various industries, with a predicted value of $60 billion by 2025. Generative AI can be used for text generation, translation, summarization, and more.
- *E-commerce*: E-commerce sales continue to grow, with predictions of over $6.3 billion in sales next year. Businesses are adjusting their marketing and sales strategies to maximize the impact of e-commerce on their bottom line.
- *5G and Data Collection*: The development of the 5G mobile network has the potential to radically change business operations. It can deliver higher data speeds, greater reliability, and sub-10ms latency, making it crucial for businesses that want to offer new services and track insights.
- *Remote and Hybrid Work*: With the rise of remote work, businessesa are having to adapt to new ways of working. Many employees are adopting a hybrid work schedule, and businesses are having to find ways to ensure productivity and efficiency in these new environments.
- *Social Media Commerce*: Businesses are expanding their ads, communities, and commerce on social media. Social commerce is expected to see huge gains in categories like clothing, electronics, and home decor, with predictions of reaching $1.2 trillion by 2025.