Tips for Spotting a U.S. Recession Before It Becomes Official

As the U.S. nears a record-long expansion in July, the conversation is increasingly turning to when it will all end.

Recessions are inherently hard to spot. The National Bureau of Economic Research’s Business Cycle Dating Committee, a panel whose determinations of when expansions begin and end are accepted as official, generally waits about a year to make a call. By the time a sustained downturn is evident in data like payrolls or gross domestic product, a contraction may have already begun.

Read more: Record Drop in Morgan Stanley Gauge Sounds Economic Alarm

Recession fears ebbed Friday as solid retail sales suggested consumer spending remains healthy. But investors still expect a Federal Reserve interest-rate cut in July after other recent figures showed slower job gains and low inflation, while President Donald Trump’s tariff threats weigh on businesses. And the chance of a recession over the next 12 months has risen to 30% from 25%, according to a June 7-12 survey of economists.

Economists look to a wide range of data -- from government, private and market sources -- to try to figure out just when things are headed downhill. Here’s a sampling:

Yield Curve The yield curve refers to the difference in rates between Treasuries with short-term and long-term maturities. Most of the time, long-term yields are higher because investors typically demand higher returns for locking up their money for a longer period. But when short-term rates are higher -- known as an “inverted” curve -- it’s a sign economic growth is expected to ebb, with policy rates eventually falling to cushion the slowdown.

The spread between three-month and 10-year securities has inverted before each of the last seven recessions, elevating such an event as a key signal of a future economic downturn. But it’s not automatic, and some argue central bank policies like quantitative easing have made the curve less of a direct predictor.