This is the daily update for today, December 5, 2025.
One word that discribes the US economy: Caution
Based on the comprehensive economic data available, the probability of a recession in the near future appears to be a point of concern. The data indicates several warning signals which are often associated with economic downturns. The consumer price indices, including both all items and excluding food and energy, are showing consistently high rates of change year-on-year. Notably, the consumer price index less food and energy has consistently exceeded 3%, which is often viewed as a red flag for inflation and a potential sign of an overheating economy. Additionally, the M2 money stock has been growing steadily at over 4.5% year-on-year, which can also indicate potential inflationary pressures.
Moreover, the yield curve, particularly the 10-year to 3-month and 10-year to 2-year rates, is indicating a flattening trend in recent weeks. Generally, a flattening yield curve suggests tightening financial conditions, potentially leading to reduced borrowing and investment, and is often linked with economic slowdowns. Finally, the Kansas City Financial Stress Index has been consistently registering negative values, indicating relatively low levels of financial stress. These factors combined suggest a cautious approach to future economic outlook, as there are several warning signals that a recession may be on the horizon.
Text written with ChatGPT from OpenAI.