Indicators of Imminent Recession

The probability of a recession is high due to three key factors: the lag effect of the Fed tightening cycle, rising bond yields, and banks tightening lending standards. Historically, when all these factors align, a hard landing is inevitable. The current economic environment is considered risky as interest rates have increased significantly, and banks are tightening lending standards. This is evident in the struggling small business sector and a divided consumer base, with low-income consumers entering recession territory while high and middle-income groups benefit from a robust stock market and stable house prices.