CNBC explains 'Why Recessions May Be Inevitable'

The yield curve has inverted twice so far this year, which is a sign of a coming recession.

At 1.75 percent, the three-month yield is still well below the 10-year yield of 3.48 percent, so no inversion there.

But on Tuesday, the two-year Treasury yield briefly crossed above the 10-year yield, before pulling back underneath at 3.42 percent. The two yields inverted previously in early April. Other, less-followed parts of the yield curve are also already inverted. Though they’re less consistent in predicting recessions as the three-month yield versus the 10-year, they show the trend is swinging toward pessimism.

Following an inversion in 2019, the global economy plunged into recession in less than a year. At that time, though, the bond market did not see the pandemic coming. It was focused on global trade tensions and slowing growth.

I followed the yield curve closely in 2018 and 2019, but haven't mentioned it since. It's time I did, as I would be derelict in my duty as a doomer blogger if I didn't discern a coming recession. For that reason, I'm sharing CNBC explaining Why Recessions May Be Inevitable.

America has experienced at least 30 recessions throughout history, dating back as early as 1857. Some experts believe that they have become an inevitable part of the economic cycle that fluctuates between periods of expansion and contraction. Nonetheless, certain measures can still be taken to make recessions less likely. As the nation’s authority on monetary policies, the Federal Reserve plays a critical role in managing recessions. So why do recessions happen and what can the Fed do about it? Watch the video to find out.

While this video reminds me of my complaints about CNBC viewing the economy through the lens of investing, I still think it's generally a good explanation of the causes and effects of recessions and it includes the yield curve as one of the signals that a recession is coming.

CNN lists other signs in All the recession warning signs this week.

It's the question everyone is asking: Are we about to enter a recession?

A tepid stock market, soaring inflation, and rising interest rates have left Americans less than optimistic about the state of the economy. Consumer sentiment has plunged to a record low, according to a University of Michigan survey released last week, fueled by frustration over high prices.

Earlier in June, the consumer price index jumped to its highest level in 40 years. The government's primary inflation gauge saw prices surging 8.6% for the past 12 months. And now the Fed is raising interest rates at an aggressive pace as it looks to slow down economic activity.

To be clear: we are not in a recession, at least not yet. But signs of an economic downturn are cropping up all over, in sectors from commodities to housing.

One of the signs CNBC mentioned was falling consumer sentiment, which was also a cause. CNN reported that's happening.

A closely followed University of Michigan survey released Friday found that US consumer sentiment hit a new record low in June -— the lowest recorded level since the university started collecting the data 70 years ago.

The June index saw a 14.4% drop since May as consumers became increasingly alarmed about inflation. About 79% of those consumers said they expected bad times for business conditions in the upcoming year, the highest level for that metric since 2009.

Yikes! Maybe I was too sanguine about the likelihood of high gas prices causing a recession when I wrote "Most of the money being spent on petroleum now stays in the U.S., which won't reduce GDP directly, although it will cause other economic hardships and move enough money around in ways that could cause a recession indirectly." That may be happening now.

On a less serious note, tomorrow is Paul Bunyan Day. Stay tuned to see if I blog about the figure from folklore or something more realistic.