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A comment on The Most Reliable Recession Indicator of the Past 50 Years Has Started Blaring. Parent comment

Re:The Most Reliable Recession Indicator of the Past 50 Year... by mercutio2 on Wednesday July 03, 2019 @08:03PM (#20350269)
I’m as happy as anyone to grant that economics is not a hard science.

But saying our only explanation for this predictor is “the market thinks” seems pretty off base.

- Yields are based on demand

- Yield inversion indicates heightened demand for long term safe stores of value, reduced demand for short term stores of value

- This pattern maps well to our understanding of investor psychology

- Recessions generally happen when investors are gloomy about short to medium term prospects, leading to a reduction in investment, leading to a reduction in aggregate demand

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Re:The Most Reliable Recession Indicator of the Past 50 Year... by krageon on Thursday July 04, 2019 @03:22AM (#20352362)
Your reasoning sounds really seductive, which is on point for economics. The next step is actually giving solid reasoning (preferably backed by hard evidence - this means numbers) for why this is the truth and not some other equally seductive line of reasoning. Without this, you're just reading tea leaves and explaining them well.
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