Renowned economist and professor Campbell Harvey has recently warned that the United States is facing a higher risk of a hard landing – a sudden and severe economic downturn – in the near future. Harvey, who is widely considered to be one of the world’s top experts on the yield curve, has based his prediction on several indicators, including the inversion of the yield curve, slowing global growth, and trade wars.
The yield curve, a graph of the yields on different maturities of government bonds, is an important economic tool that is closely watched by policymakers, investors, and economists. When the yield curve inverts – when short-term interest rates exceed long-term rates – it is often seen as a signal of an impending recession.
According to Harvey, the yield curve inverted in 2019, and while it has since returned to a more normal shape, it is still a cause for concern. In a recent interview with CNBC, he stated, “We’re in a place where the yield curve is no longer inverted, but we’re not in a very safe place because it’s still flat.”
Additionally, Harvey has highlighted slowing global growth and trade tensions as major risks to the US economy. He warned that the ongoing trade war between the US and China, as well as the rise of protectionism in other countries, could lead to a global recession that would significantly impact the American economy.
Furthermore, Harvey pointed out that the US is already experiencing a slowdown in manufacturing and other industries, which could signal a weakening economy. He stated, “We’ve seen softness in industrial production, manufacturing, so we’re definitely in a more fragile position than we were six months ago.”
Harvey’s warnings come as the US economy continues to enjoy a record-long expansion, with low unemployment and solid growth. However, his insights into the yield curve and other economic indicators have earned him the title of “yield curve guru,” and his predictions should not be ignored.
In conclusion, Campbell Harvey’s warning of a hard landing for the US economy should be taken seriously by investors, policymakers, and anyone concerned about the health of the global economy. While the US may still be riding a wave of economic growth, there are clear signs of danger ahead, and we must be prepared for the possibility of a sudden and severe downturn.