Is a US recession on the cards?

The US economy is on its way to experiencing the longest growth cycle in history. The Federal Reserve has raised interest rates eight times since December 2015 in an effort to normalise monetary policy, and this has fuelled the debate about when the cycle may end.

Although there are some imbalances appearing in the US, we see more supportive economic factors than we do recession risks over the medium term. The Federal Reserve Bank of New York's own recession probability model has risen in recent years but is low compared to levels ahead of previous recessions.   The US yield curve has intensified cycle-related concerns, as the 2-year to 10-year spread has declined from 260bps in 2014 to around 25bps. Recessions usually precede a US Fed hiking cycle and an inverted yield curve. However, the Fed has downplayed this concern recently, owing to the low...