Recession Indicators Are Flashing Yellow — Here's What to Watch

A handful of historically reliable recession indicators are flashing yellow, prompting renewed debate among economists about the durability of the current expansion. The yield curve, while no longer inverted, remains flat. The Conference Board's Leading Economic Index has declined for three consecutive months. And the ISM Manufacturing Index has been in contraction territory for four of the past six months.

"The economy is sending mixed signals," said Dr. Victoria Chen, chief economist at a major research institution. "Consumer spending and the labor market remain strong, but the interest-rate-sensitive sectors — housing, manufacturing, business investment — are clearly under pressure."

Historical Base Rate

Recessions are inherently difficult to predict. The U.S. economy has experienced 13 recessions since World War II, and the average expansion has lasted approximately 57 months. The current expansion is now 42 months old — below the historical average, suggesting it is not unusually long by historical standards. But the unusual nature of the post-COVID recovery makes historical comparisons complicated.