I’m Mary Walden, with economist MW, welcoming you to the economic perspective. Today’s program looks at the yield curve. Mike, investors, business persons, and workers – really everyone – benefit from information helping to predict the economic future. I understand one of the ways to do this is to look at the yield curve. What is the yield curve, and what is it telling us about the future economy?
- Yield curve is a comparison of short term and long term interest rates
- Usually long rates are higher than short rates – risk of waiting longer to get your money
- But when the two get closer – and especially when the short rates turn higher than the long rates – that is a flashing red sign
- Recently the long and short rates have gotten closer – indeed, some short rates (2 yr) were have been higher than some long rates (5 yr)
- Implication – not to panic, but suggesting a somewhat slower-growing economy in the immediate future
- Does this mean a recession – don’t yet know
And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.