Following on from a previous post about the inverted yield curve, The Economist have produced a very good video explaining how when the outlook is gloomy investors turn buy safe assets like long-term bonds, pushing their price up so the interest rate for holding them falls. Higher bond prices are also a signal that there are fewer exciting investment opportunities elsewhere such as the stockmarket. Unemployment is also an indicator that closely correlates with a recession and even R index* can fuel recessionary expectations. There are some particularly good graphs in the video.
*The recession index (the R-word index) is an informal index created by The Economist which counts how many times the word ‘recession’ is mentioned in the Washington Post and the The New York Times in a quarter.