The curve has inverted in the past half century — with only one false signal. In a recent survey of nearly 300 business economists, three-quarters expect a recession by the end of 2021 — with more than half thinking it’ll come by the end of 2020.
The good news is that we have the chance to head off a crisis — just like we had a chance to head off the 2008 crisis — if we take bold action now to address the underlying problems in the economy: Warning lights are flashing.
A period of rapid real GDP increases faster than population expansion will cause a rise in per capita incomes.
This can help lift people out of poverty as measured by the $1.90 a day (PPP) benchmark used by the World Bank.
Those trends — shady subprime lending, rising household debt, a mortgage market where lenders didn’t bear the risk of their loans — set the stage for the 2008 crisis.