American Investment Services, Inc.

Disciplined, Diversified, & Cost Effective

Mar. 2019 – Is Recession Ahead?

There is rising speculation in the media that recession is on the horizon. While we cannot say for certain what is coming, we can observe that media tend to amplify, if not exaggerate, the significance of newly released data. Fortunately for our readers our parent organization, AIER, has for decades published a consistent and dispassionate assessment of the current state of the economy based on the most recent statistical indicators.

AIER’s Business Conditions Monthly provides and empirical assessment regarding the likelihood of a turning point in the business cycle in the near future. Its indicators can be of value to both households and businesses. For example, workers in cyclical industries such as mining or construction can engage in “consumption smoothing” over the business cycle. Similarly, small businesses might pare their inventory if a slowdown is on the horizon.

AIER’s currently counsels that “despite having the Leading Indicators index below 50 for a second consecutive month, the outlook remains moderately positive, though with a heightened degree of caution.” In other words, there is no cause for alarm.

Among those leading indicators is the interest rate spread between one-year and ten-year U.S. Treasury obligations. The chart below plots the spread since 1960. These data currently reveal an “inverted yield curve” in which short term rates exceed longer term rates. For AIER’s take on this development and what it might portend, please read “Fear Not the invested Yield Curve – Yet” from AIER in this issue.

Also in This Issue:

Social Security Claiming
Tax Reform Basics and Roth Opportunities
Fear Not the Inverted Yield Curve – Yet
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow-Jones Industrials Ranked by Yield
Recommended Investment Vehicles