The U.S. is currently in the longest expansion in the country’s history. Simultaneously, the U.S. bond market yield curve has remained inverted for just more than three months.

According to Zions Bank Senior Economist Robert Spendlove, this may be an indicator that a recession is on its way.

Most frequently the yield curve compares three-month, two-year, five-year, 10-year and 30-year U.S. Treasury debt and is used as a benchmark for other debt in the market, like mortgage rates or bank lending rates.

The “inversion” of the yield curve is caused when the yield on short-term bonds are greater than the yield on a longer-term bond. The most recent numbers from the U.S. Treasury, on July 5, show that the yield on a three-month bond is at 2.23%, whereas a 10-year bond, 7-year bond and 5-year bond are at 2.04%, 1.93% and 1.84%, respectively.

“In a normal cycle, you should have interest rates increasing as the time horizon goes out. And that would be a normal curve,” Spendlove said. “But the fact that you have the three months higher than the 10 year ... that is a sign that we have weakness coming in the future.”

However, Spendlove and other economic forecasters said it doesn’t necessarily mean the U.S. is headed for a repeat of the Great Recession. It might just be a “slowing down” of economic growth.

“We’re definitely seeing signs of an economic slowdown. When we look at things like industrial production, job growth, consumer confidence, (these things) are coming down from where they were in the past,” Spendlove said. “There aren’t clear signs that a recession is imminent.”

But, Spendlove admitted, it’s not really possible to predict when or if a recession is going to happen. “You can only tell a recession happens really in the past.”

Tracie McMillion, head of global asset allocation strategy for the Wells Fargo Investment Institute and the spokesperson on a recent Wells/Fargo Gallup study on investor optimism, admitted as well that it’s difficult to pinpoint when a recession might happen.

“Will there be another recession? I think we can all agree on that. It’s just the timing of when a recession might occur,” McMillion said. “We look at a number of different factors, and it’s our belief that a recession is not going to occur within the next 12 months.”

The Wells Fargo/Gallup study found that investors are less optimistic than they were just a year ago about maintaining their household income and reaching 12-month and five-year investing goals. More than half of investors say they’re concerned the stock market is “peaking,” and 51% of investors believe a recession will either begin later this year (11%) or in 2020 (40%). However, two-thirds of investors, both retired and non-retired, also say they feel “prepared” to handle their investments in the event of a recession.

McMillion said the main ways investors are addressing a potential economic recession are diversifying their investment portfolios and increasing the amount they save. Savings, she said, is No. 1.

“The earlier you start to save, the more you can take advantage of compounding interest,” McMillion said. “If you start planning early and start saving early (for retirement), then you’re in a much better position to have choices about what your retirement (looks like).”

McMillion also advised people to have a long-term savings goal to work toward, with smaller financial goals they can revisit at least once a year.

Natalie Gochnour, director of the Kem C. Gardner Policy Institute at the University of Utah and chief economist for the Salt Lake Chamber, added being “mindful of spending patterns and commitments” when it comes to financial security, on top of saving during “prosperous times,” especially in times of economic uncertainty.

“I use the term stop, look and listen,” Gochnour said. “It’s a really good time to be very focused and data driven in the things that you do. The economy can change very quickly.”

However, Spendlove said, it’s important to not overreact to daily changes, or even monthly or yearly fluctuations. Like McMillion, he suggests focusing on the long term.

“It’s important for people to put money aside for the long term, and not get (startled) by fluctuations,” Spendlove said. “The notion is ... you’re supposed to buy low and sell high. But when people are investing based on emotion, they tend to buy high, and then sell low.”

It’s important to remember, Spendlove added, that Utah actually came out well from the 2008 recession, with the “strongest economy in the nation.”

Gochnour credits this in part to Utah’s diverse economy. Rather than relying on just the tech industry for economic drive and growth, Utah also has rapid growth in manufacturing and tourism, and sectors like construction and health services are also positive.

“I continue to believe that this is a prosperous time, there’s a lot of opportunity in this economy,” Gochnour said. “But there’s no question in my mind, that it’s temporary.”

An example of how growth can be good but unsustainable is with unemployment. Utah’s unemployment rate is at a 50-year low, Spendlove said, which sounds really good — but what it also means is there’s a labor shortage.

“The problem is, it’s going to be really difficult for employers to find workers,” he said. “In an extreme sense, (that) can actually start to hurt companies, because they can’t grow ... if it gets too extreme, that very low unemployment can start to hurt overall profitability and hurt the overall economy.”

Of course, that’s an extreme measure, offset in part by Utah’s high in migration. Spendlove, Gochnour and McMillion all believe that with wise investing and saving, Utahns can come on top.

“I think even if the nation were to see a significant slowdown or even the recession, I think Utah is very prepared for that,” Spendlove said.

Carley Porter covers northern Utah County and business for the Daily Herald. She can be reached at

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