The chart that predicts recessions

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  • Published: 03 September 2019
  • A chart called the "yield curve" has predicted every US recession over the last 50 years. Now it might be predicting another one.

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    Economic experts are starting to warn that a US recession is becoming more likely because of something called the "yield curve." So what's the yield curve? What does it show? And why is it bad if it "inverts?" We visualized the yield curve over the past four decades, to show why it's so good at predicting recessions, and what it actually means when the curve changes.

    Read more about the yield curve:

    * Vox's Matt Yglesias has an explainer: vox.com/2019/8/14/20805404/yield-curve-inversion-recession-10-year-2-year
    * Here's how the man who discovered this trend, Campbell Harvey, describes the phenomenon: forbes.com/sites/carminegallo/2019/08/18/how-the-finance-prof-who-discovered-the-inverted-yield-curve-explains-it-to-grandma/#17cadff86cae
    * The New York Times explains it .... with a football analogy: nytimes.com/2019/08/15/upshot/inverted-yield-curve-bonds-football-analogy.html
    * We used data from the Federal Reserve to make these charts. Here's the yield curve data day-to-day: treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
    * And if you really want to dig into historical data, use this tool: federalreserve.gov/datadownload/Choose.aspx?rel=H15

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Comments • 1 842

  • M. Rojas
    M. Rojas  4 hours back

    Our markets go up and down. So us having a recession soon isnt surprising.

    • J B
      J B  17 hours back

      An inherent feature of capitalism.

      • Dr B
        Dr B  1 days back

        But would not be wise to buy 10y bonds and just wait until US pay back? Just saying.

        • Cynical Liberal
          Cynical Liberal  4 days back

          Saying a recession is coming can actually cause a recession. (Self fulfilling prophesy.)

          • Gili Cohen
            Gili Cohen  2 weeks back

            Can you do one on mega churches

            • ኤርትራ EPLF ጎብለል ኣፍሪቃ

              I hate the stock market and wall street.

              • jwang604
                jwang604  3 weeks back

                Inverted yield curve reflects investor’s sentiment but it does not necessarily mean there’s a recession in the near term.

                • Facundo Madariaga
                  Facundo Madariaga  3 weeks back

                  Sounds a lot like a self-fulfilling prophecy

                  • Biswarup Chaki
                    Biswarup Chaki  3 weeks back

                    Ya it already came in india

                    • melchior22222
                      melchior22222  3 weeks back

                      Great explanation

                      • Daniel Gonzalez
                        Daniel Gonzalez  3 weeks back

                        How can we prepare ? For those of us who are not as informed on the subject 😉

                        • Kay
                          Kay  4 weeks back

                          So the PEOPLE don't matter, just the investors. Good ol' capitalism.

                          • some dude
                            some dude  4 weeks back

                            I didn't see 87 and 94 in the video.

                            • Keith Topper
                              Keith Topper  4 weeks back

                              So a recession happens because people think a recession will happen. Great reporting.

                              • Kenneth Wang
                                Kenneth Wang  1 months back

                                Great video, but a couple things that could have been clearer. One is that the longer term bonds (generally) pay out more per _year_ than short term bonds. Not just pay out more overall. Like, a 2 year bond may pay out 2% per _year_ while a 10 year bond may pay out 3% per year. Your graphics made it look more like a 10 year bond just paid out more in total compared to a 2 year bond.


                                The second thing is there is no mention of _why_ a longer term bond generally pays out a higher rate than a shorter term bond.

                                • Martin Kadlecik
                                  Martin Kadlecik  1 months back

                                  I always wondered how Plubuses got made.

                                  • Jackie Valdez
                                    Jackie Valdez  1 months back

                                    this is giving me anxiety

                                    • Jackie Valdez
                                      Jackie Valdez  1 months back

                                      i’m a student and expected to be looking for my job within in next few years 🙃🙃

                                  • J-Dubz
                                    J-Dubz  1 months back

                                    If we have the power to predict economic downturns or even recessions, do we have the collective power to make sure it doesn’t happen

                                    • qwerty uiop
                                      qwerty uiop  1 months back

                                      some line: *curves down*
                                      everyone ever: *panicking*

                                      • HongMSF
                                        HongMSF  1 months back

                                        Can someone confirm this for me? If a 2-year bond yield is high, the 5-year bond yield is low and the 10-year bond is high, is that classified an inverted yield curve?

                                        • The J
                                          The J  1 months back

                                          Economics hurts my brain

                                          • Baluvideo
                                            Baluvideo  1 months back

                                            OK. The curve above 2008 was really pointing upwards. Was that an animation error or was the curve right and the claim wrong? Somethings off there.

                                            • Baluvideo
                                              Baluvideo  1 months back

                                              But this is a really good video. Was just wondering.

                                          • xele fonte
                                            xele fonte  1 months back

                                            This video should be longer. It was so short I had to watch it twice. When referring to yield curve, they are referring to bond yield curve. This measurement isn’t totally accurate because 1982 and 2000 were hardly a recession not to mention the 1982 recession started in 1981. Vox mention these things in their video but they’re so hard pressed on getting their viewers to believe in this measurement being the sole predictor of recessions. The 1982 and 2000 minor economic downturns were hardly recessions especially compared to what occurred in 1988 and 2008. That’s why I don’t like this measurement as being totally prophetic. It’s a good measurement but it’s not fair to compare all economic downturns as equal recessions. Recession is a strong word that should only be used during times like 1988 and 2008. Nobody ever tells themself...you remember that Great Recession in 2001? Nobody.

                                            • mrblue999
                                              mrblue999  1 months back

                                              I remember the recession of 2001 because I couldn't find a job and again in 2009. Just because it was milder doesn't mean it wasn't a recession. And Recession has an official definition, not what you feel or what people remember.

                                          • Polite Cat
                                            Polite Cat  1 months back

                                            dont worry guys, trump will just mark the chart higher with his sharpie

                                            • Michel Mansour
                                              Michel Mansour  1 months back

                                              I will make a guess: They will talk about the treasury yields, which everyone who made a decent life decision (learn basic economics) will know but everyone else won't.
                                              Edit: Fixed the word Treasury

                                              • TheRealNoodles
                                                TheRealNoodles  1 months back

                                                Plenty of decent and successful people out there don't care about yield curves.

                                            • Suryateja Kakkirala
                                              Suryateja Kakkirala  1 months back

                                              Very nice Vox, clearly explained yield and how it effects investment. One of the best videos on this topic

                                              • Shaun Mantell
                                                Shaun Mantell  1 months back

                                                It's Bonkers,why would you wish for a recession,won't be happening any time soon.Trump promised and delivered a fantastic economy,this videomis problematic.

                                                • Domepeace_ltd productions

                                                  Dems want a recession so bad.

                                                  • Pablo Emiliano González Guerrero

                                                    So, basically, the chart doesn't predicts anything. It only shows to people who don't understand, that other people that do understand, have predicted a recession.
                                                    What I mean, is that presidents don't get alerted from this graphic that a recession is coming. When you see this graphic, the president, the markets, companies, etc. know that there is a probable recession since a considerable time.

                                                    • fishshit
                                                      fishshit  1 months back

                                                      people have literally been saying this for 3 years now every august actually, in fact the market for me has been going up im almost at my alltime

                                                      • Kabloosh
                                                        Kabloosh  1 months back

                                                        Recessions are awesome. Best time to buy stocks.

                                                        • Jackson Spurling
                                                          Jackson Spurling  1 months back

                                                          lol Vox trying to talk about economics

                                                          • ZKB rhodas
                                                            ZKB rhodas  1 months back

                                                            0:46 what are u trying to prove there? the line is pointing upwards

                                                            • Solar Coaster
                                                              Solar Coaster  1 months back

                                                              Lol, vox is cancer

                                                              • S C
                                                                S C  1 months back

                                                                Mass always happens every 10 years .

                                                                • Coty Martin
                                                                  Coty Martin  1 months back

                                                                  So basically you can create an inverted yield curve by just thinking about a recession.

                                                                  • Rahul Shivaram
                                                                    Rahul Shivaram  1 months back

                                                                    If you have an interest in US politics/economics & just 10 mins, I wrote this article: "How To Fix America" by Rahul Shivaram
                                                                    @t

                                                                    • Don Elliott
                                                                      Don Elliott  1 months back

                                                                      spreading fear of a recession probably causes recessions more than a yield curve.

                                                                      • Robert Shackleferd
                                                                        Robert Shackleferd  1 months back

                                                                        I agree with one of the comments, the sound effects and track AWESOME

                                                                        • TheOctoberOwl
                                                                          TheOctoberOwl  1 months back

                                                                          But why would you sell your bond for less than what you paid for it? Just to have money now instead of later? Even if the return is less, you’ll still get your money back plus interest

                                                                          • mauriano baruso
                                                                            mauriano baruso  1 months back

                                                                            HERE IT COMES

                                                                            • Bob Ford
                                                                              Bob Ford  1 months back

                                                                              Sure seems the leftests are wishing for a recession. The economic indicators point the other way. Sorry socialists.

                                                                            • Dabacon BossBro
                                                                              Dabacon BossBro  1 months back

                                                                              I know Vox is left wing, but even as a right winger, I rely a lot on them for my standard news and information. Really good content and actual quality stuff. Good work.

                                                                              • Ghost Banned
                                                                                Ghost Banned  1 months back

                                                                                America will never recover

                                                                                • twostepRMX
                                                                                  twostepRMX  1 months back

                                                                                  Funny how when the stock market grows nothing changes for your average American but when it crashes we all lose our jobs and rich people get bailout money

                                                                                  • Antonio Sraffa
                                                                                    Antonio Sraffa  1 months back

                                                                                    Leave it to the left-leaning Vox to jump-start a recession through the analysis of empirical data.


                                                                                    Far better to just make up "facts" and call it a day!!
                                                                                    'Murica!...
                                                                                    'MURICA!!...

                                                                                    • Meme Machine
                                                                                      Meme Machine  1 months back

                                                                                      This all seems highly semantic-y and easy to fix...

                                                                                      • Hark
                                                                                        Hark  1 months back

                                                                                        cool so if trump loses itll hit during a democrat and republicans will spin it in their favor