the likelihood of a recession in the united states within the next year has risen to almost 58 the highest level since august 1982 according to the new york federal reserve the recessionrisk indicator is now greater than it was in november 2007 just before the subprimelehman crisis when it stood at 40 and december 2001 when it was at 46 read also economist lists 3 recession red flags investors should be watching in 2023 the new york federal reserves model uses the yield curves slope or term spread to predict a us recession twelve months ahead the term spread used by the new york fed refers to the gap in yields between the 10year treasury bond and the 3month bill when yields on shorterterm bonds are higher than yields on longerterm bonds the yield curve is considered inverted an inverted yield curve has reliably predicted each of the previous eight us recessions since 1970 why does an inverted yield curve indicate a recession  when a yield curve is inverted investors fear that the current high level of interest rates reflected in elevated shorterterm yields will push the economy into a recession causing the central bank to cut interest rates in the future thus discounting presently lower longerterm yields this is why an inverted yield curve is often a precursor to a recession the spdr bloomberg 13 month tbill etf bil is a popular etf which offers exposure to the ultrashort end of the treasury curve investing in zero coupon us tbills with less than three months until maturity the ishares 710 year treasury bond etf ief instead offers exposure to treasury bonds with seven to 10 years to maturity treasury yield curve inversion where are we now in march the term spread was negative 115 as 10year rates were around 35 and 3month yields were around 465 the 10year3month yield differential has further worsened to a negative 16 at the time of writing with the 3month yield jumping to 52 and the 10year yield trading at 36 if such a spread holds or expands further in april then the next months new york fed recession probability indicator will likely become even more negative than its previous assessment of a 578 chance of a recession occurring before march 2024