Debates about whether a recession looms on the horizon have been going on for a while now. Some have concluded that 2023 will be decidedly bleak while some are more sanguine about the state of the economy, asserting there will be slower growth but the world remains far from a recession. Regardless of which camp you belong to, it is always better to be prepared for one. We highlight several leading indicators, or data that changes in advance of the rest of the economy, that are often observed for signs of a possible downturn and suggest ways for you to be better prepared.

What signals a recession?

The first indicator is the yield curve inversion which occurs when the yields on short-term bonds exceed those on long-term ones. Duration is an important concept in the fixed income space. Under normal economic conditions, bonds with longer durations have higher yields because the risk...