Before we embark on the interpretation, please read our previous post below on how an economy works.
CPI/PPI --->> M1-M2 spread/3m-10y yield spread --->> PMI --->> GDP
Let's focus on the 1st factor (3m-10y yield spread) first.
The 2nd factor (PMI) had been contracting for the past 8 months. This consecutive contractions in PMI will impact or show up on the GDP eventually because the GDP is a lagging indicator on economic growth.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEis5YR8ijtFgApjj1QI5QoSbO9Jj7eH70tLR9FmwrEef9vQt0rxL8c-9X3uU19XEtD4P7sHF-2jH3MKATJNI_8u1yEArmJykgjc3paifcfVenO6GgymATEe5nxZlvwSLVYPt7KBiLgVAp-IVZuDKq-OmCxL_JmKmmv3FoFDbBmCqplFmyPcPQBD9RK27RM/w640-h573/12m%20PMI.png)
Since both factors impact the GDP and are flashing RED signals, we don't see how the US can avert a recession. This has become a WHEN question and not WHAT IF.
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