RE:RE:RE:RE:RE:It's different this time Of course averages are to be used with a grain of salt. It is probably a good idea to use a number of statistical measures such as a standard deviation from the mean which is how statisticians measure probable outcomes based on the spread around the mean. Is it a 1 or 2 standard deviation event?
While averages are an ok tool to use, one must keep in mind that during the GFC, it took 16 months after inversion for the recession to arrive. We are only about 10 months into this one which perfectly makes sense when they often say that monetary policy works with long and variable lags. I've looked at all recessions post World War 2 when the yield curve inverts and it suggests the recession can take anywhere between 5 months (1973 recession) and 16 months ( GFC) for the recession to arrive. The average of all of these recessions is about a lead time of 10 months. Trying to determine the exact month when the economy pivots is next to impossible but we can say with confidence that it's likely to happen in the near future!