Research beginning in the late 1980s documents the empirical regularity that the slope of the yield curve is a reliable predictor of future real economic activity. Today, a substantial body of evidence exists from which various useful stylized facts have emerged.

For example, the difference between 10-year and 3-month Treasury rates, which is normally positive, has turned negative before each of the last eight officially-dated U.S. recessions (see graph below). Remarkably, the yield curve has been flat or inverted before every recession since the 1950s. Most recently, the curve was inverted from June to September 2019, and again in February 2020, and on June 8, 2020 the NBER announced the official start of a recession in March 2020. The end of the recession has not yet been determined.

The following links provide more detailed information:

These links include updates of material originally available at the New York Fed web site.


"… signals from the yield curve have often been dismissed because of supposed changes in the economy or special factors influencing interest rates. This paper, however, shows that the puzzling power of the yield curve to predict recessions relative to that of professional forecasters appears to have endured, despite the wide dissemination of knowledge about the yield curve's predictive power."

From Glenn Rudebusch and John Williams, Federal Reserve Bank of San Francisco,
in "Forecasting Recessions: The Puzzle of the Enduring Power of the Yield Curve"