This Recession Forecasting Tool Hasn't Been Wrong Since 1966 -- and It Has a Clear Message for Wall Street
There's more to forecasting a U.S. recession than meets the eye.
Wall Street hasn't been hurting for catalysts of late. Following a nearly two-and-a-half-year climb in the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC), which was spurred by the rise of artificial intelligence (AI), investors have been hypnotized in 2025 by President Donald Trump's ever-changing tariff policies, wild swings in Treasury bond yields, and the return of stock-split euphoria.
But it's fair to question whether Wall Street and the investing community are missing the bigger picture: The U.S. economy.
Although the economy and stock market aren't tied at the hip, corporate earnings often ebb and flow with the domestic economy. According to one recession forecasting tool, which hasn't been wrong in 59 years -- and has only been incorrect once when back-tested to 1959 -- things may not be as rosy for the U.S. economy and stock market as they appear on the surface.
