Looking at the past two decades, whenever the Fed has started tightening AND the yield curve has flattened, it has presaged a downturn in economic activity, as reflected in the ISM.
That is exactly the situation we find ourselves in at present:
Federal Reserve, Yield Curve and the Economy
click for larger chart
chart courtesy of Michael Panzner, Rabo Securities
Panzner used this measure because it has had a pretty good correlation with swings in year-over-year Gross Domestic Product data during the period.
Random Items:
Signs of listless economy persist
The Two-Income Trap
Inside Kerry and Bush’s Technology Agendas
The Longevity Gene
British firm finds the nuclear industry’s ‘holy grail’
Iran asks the world to nuclear party
Quote of the Day:
“The work of the individual still remains the spark that moves mankind forward.”
–Igor Sikorsky
