The Yield Curve and Recession Prediction: Why It Works and Whether It Still Does

The 10-year minus 2-year Treasury spread has predicted every US recession since 1960. Inversion typically precedes recession by 12-18 months. The 2023-2024 inversion was the longest on record without a recession. The pandemic may have changed the relationship between monetary policy and the economy. Still a valuable indicator but should be combined with other data.