--- title: These 6 Charts Show Why the U.S. is Not Heading for a Recession - Burney Investment Management description: Corrections are completely ordinary, healthy market events, yet there seemed to be an outsized negative reaction from investors during the third quarter correction.  Surely, the fact that it had been nearly six years between corrections was a major factor and investors who could not stomach the volatility implicit in equities were chased back to the ... --- [Skip to content](https://burneyinvest.com/blog/us-not-heading-towards-recession#main-content) [![Burney Investment Management](https://burneyinvest.com/hs-fs/hubfs/theme/Burney_Invest_Color_Horizontal_%232b.png?width=300&height=110&name=Burney_Invest_Color_Horizontal_%232b.png "Burney Investment Management")](https://burneyinvest.com/) - About - [Company Overview](https://burneyinvest.com/about) - [Burney Difference](https://burneyinvest.com/the-burney-difference) - Strategies - [Size & Style 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Effective Investing](https://burneyinvest.com/blog/performance-matters-7-steps-toward-more-effective-investing) Corrections are completely ordinary, healthy market events, yet there seemed to be an outsized negative reaction from investors during the third quarter correction.  Surely, the fact that it had been nearly six years between corrections was a major factor and investors who could not stomach the volatility implicit in equities were chased back to the sidelines.  Still, some market timers see this as an opportunity to go to cash, predicting a bear market on the horizon.  Bear markets don’t pop up out of thin air, though, so we looked for evidence of a *recession* on the horizon.  These 6 charts show why the U.S. is not heading for a recession. **The Yield Curve is Healthy** ![September_2015_Term_Spread](https://burneyinvest.com/hs-fs/hubfs/Imported_Blog_Media/September_2015_Term_Spread.png?width=615&height=247&name=September_2015_Term_Spread.png) The slope of the yield curve, also called the term spread, has been a [reliable leading indicator of recessions](http://www.newyorkfed.org/research/capital_markets/ycfaq.html) going [back to 1950](https://www.burney.com/wp-content/uploads/2013/09/Yield_Curve_Note_-_White_Paper.pdf).  It is known as an inversion when long-term interest rates fall below short-term interest rates.  This inversion has preceded every U.S. recession since 1950 with only one false signal, the credit crunch and slowdown in production in 1967 that was not officially classified as a recession but still saw a 17% drop in the S&P 500 during the following 8 months.  The Term Spread as of September sits at a healthy 2.15, well above the level that would cause alarm. **Fed: The Chance of a Recession is Low** ![Fed_Chance_of_Recession](https://burneyinvest.com/hs-fs/hubfs/Imported_Blog_Media/Fed_Chance_of_Recession.png?width=620&height=264&name=Fed_Chance_of_Recession.png) Part of the U.S. Federal Reserve’s mandate is to seek full employment so it pays special attention to any risk the U.S. will fall into a recession.  This chart shows the Fed’s calculation of the percentage chance of a recession through time.  As you can see, when the alarm is raised there is a good chance a recession is imminent.  Today, that chance is just 2.91%. **Positive Jobs Growth** ![Employment_Gains](https://burneyinvest.com/hs-fs/hubfs/Imported_Blog_Media/Employment_Gains.png?width=552&height=363&name=Employment_Gains.png) At 8:30 AM the first Friday of every month, the Bureau of Labor Statistics releases its employment report establishing the official level of unemployment in the U.S.  [We pay close attention to this report](https://www.burney.com/blog/january-2015-jobs-report/) because it is a good indicator of the economy’s health and has direct implications on financial markets as well as Fed monetary policy.  The unemployment rate currently sits at 5.1%, within the range of “full employment”, and jobs have been added every year since 2009.  While we have not seen spectacular jobs growth, U.S. firms are consistently adding jobs, a good sign for the economy. **Volatility Only Spiked in Equity Markets** ![Volatility_in_Global_Markets](https://burneyinvest.com/hs-fs/hubfs/Imported_Blog_Media/Volatility_in_Global_Markets.jpg?width=605&height=452&name=Volatility_in_Global_Markets.jpg) Volatility in equity markets spiked over global growth concerns and uncertainty surrounding the Federal Reserve’s rate hike decision.  This volatility hasn’t spread to other markets, though.  We would expect volatility to rise across the board in times like 2008-09 but the trend is actually down in global currency and bond markets. **Stocks are Fairly Valued by Shiller’s PE since 1990** ![Shiller_Long_Term_PE](https://burneyinvest.com/hs-fs/hubfs/Imported_Blog_Media/Shiller_Long_Term_PE.png?width=620&height=203&name=Shiller_Long_Term_PE.png) Much is made about the Shiller PE ratio being above its historical average and it is true that today’s reading comes in high relative to history. ![Shiller_PE_-_25_Year_Average](https://burneyinvest.com/hs-fs/hubfs/Imported_Blog_Media/Shiller_PE_-_25_Year_Average.png?width=620&height=203&name=Shiller_PE_-_25_Year_Average.png) However, [there are considerable issues](https://www.burney.com/blog/dont-panic-over-cape/) with the interpretation that equities are overvalued today.  Accounting standards have changed drastically over time making apples-to-apples comparisons with past earnings impossible.  Corporate strategy also shifted in the 2000’s to emphasize share buybacks over dividends.  This shift artificially inflates Shiller’s PE ratio.  A simple way to control for these changes is to look at Shiller’s PE ratio since 1990. Making this adjustement shows that equities are actually fairly valued compared to the average Shiller PE during the past 25 years. --- *The Burney Company is an SEC-registered investment adviser. Burney Wealth Management is a division of the Burney Company. Registration with the SEC or any state securities authority does not imply that Burney Company or any of its principals or employees possesses a particular level of skill or training in the investment advisory business or any other business. Burney Company does not provide legal, tax, or accounting advice, but offers it through third parties. Before making any financial decisions, clients should consult their legal and/or tax advisors.* ## Articles you may enjoy 08.25.15 #### [A Message from our President: Mid-August Correction](https://burneyinvest.com/blog/mid-august-correction) [![](https://20453469.fs1.hubspotusercontent-na1.net/hubfs/20453469/Theme/circle_right.svg)](https://burneyinvest.com/blog/mid-august-correction) 08.24.15 #### [2015 Market Correction](https://burneyinvest.com/blog/2015-market-correction-whats-next) [![](https://20453469.fs1.hubspotusercontent-na1.net/hubfs/20453469/Theme/circle_right.svg)](https://burneyinvest.com/blog/2015-market-correction-whats-next) 09.25.14 #### [Yield Curve: The Bull has a Ways to Run](https://burneyinvest.com/blog/yield-curve-bull-market-has-ways-to-run) [![](https://20453469.fs1.hubspotusercontent-na1.net/hubfs/20453469/Theme/circle_right.svg)](https://burneyinvest.com/blog/yield-curve-bull-market-has-ways-to-run) ![](https://burneyinvest.com/hubfs/theme/burney-invest-logo-white-1-1.png) - [Size & Style Responsive](https://burneyinvest.com/strategies/size-style-responsive-ssr/) - [Burney Master Portfolio](https://burneyinvest.com/strategies/the-burney-master-portfolio/) - [Personalized Portfolios](https://burneyinvest.com/strategies/personalized-portfolios/) - [Stock Selection](https://burneyinvest.com/strategies/stock-selection/) - [About](https://burneyinvest.com/about) - [Team](https://burneyinvest.com/team) - [Resources](https://burneyinvest.com/blog) - [Contact](https://burneyinvest.com/contact) **Headquarters** 1800 Alexander Bell Dr. STE 510 Reston, VA 20191 Advisory services are offered through the Burney Company, an investment advisor registered with the U.S. Securities & Exchange Commission. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability. © 2026 Burney Wealth Management | [Research](https://burneyinvest.com/research) | [Privacy Statement](https://burneyinvest.com/privacy-policy) | [Terms & Conditions](https://burneyinvest.com/terms-and-conditions) | [Disclosures](https://burneyinvest.com/disclosures) | [ADV](https://44214779.fs1.hubspotusercontent-na1.net/hubfs/44214779/Burney%20Company%20ADV%20Part%202A%20IM%2026%20REV.pdf) | [Form CRS (ADV Part 3)](https://44214779.fs1.hubspotusercontent-na1.net/hubfs/44214779/Burney%20Company%20Form%20CRS_March%202026.pdf) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Andy Pratt, CFA", "url" : "https://burneyinvest.com/blog/author/andy-pratt-cfa" }, "dateModified" : "2024-04-29T14:27:56.009Z", "datePublished" : "2015-10-15T18:11:14.000Z", "headline" : "These 6 Charts Show Why the U.S. is Not Heading for a Recession - Burney Investment Management", "mainEntityOfPage" : { "@id" : "https://burneyinvest.com/blog/us-not-heading-towards-recession", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://burneyinvest.com/hubfs/theme/Burney_Invest_Color_Horizontal_%232b.png" } } } ```