Is a recession really coming? What other telltale signs are showing

Fears of an impending recession spiked on Wednesday, when, for the first time in 12 years, a closely watched spot on the yield curve inverted — a warning sign to Wall Street that an economic Opens a New Window. downturn might be on the horizon.

Markets Opens a New Window. around the world suffered steep losses Opens a New Window.  after the spread between two-year and 10-year Treasury yields turned negative, a development that has historically preceded every U.S. recession in the past 50 years, though sometimes by a margin of 24 months.

Two of the world’s biggest economies, Germany and the United Kingdom, appear to be shrinking; China — which is embroiled in a year-long trade war with the U.S. — also seems to be teetering on the brink of a slowdown, and that’s excluding another wave of tariffs the U.S. will impose in mid-December.

Whether the events are truly foreshadowing a recession within the next year or merely a concerning economic contraction, however, is unclear. Former Federal Reserve Chair Janet Yellen cautioned Opens a New Window. on Wednesday that she believed a recession is unlikely, suggesting the yield curve inversion as a reliable predictor could be wrong in this instance.

“On this occasion, it may be a less good signal,” she told FOX Business. “And the reason for that is that there are a number of factors other than market’s expectations about the future path of interest rates that are pushing down long-term yields.”