What to Watch: Will the U.S. Tip Into Recession?

To be or not to be? That is the multitrillion-dollar question facing the fashion industry. As fashion executives try to focus on the day-to-day running of their businesses, they are increasingly being plagued with growing concerns that the U.S. economy could soon tip into recession, putting in danger the strong consumer spending pattern retailers are enjoying. Perhaps the biggest sign to date arrived last week when a key recession indicator with a perfect track record flashed red for the third time this month. That possible warning sign was the spread between U.S. two-year and 10-yield turning negative. It happened for the first time in more than 10 years mid-August as investors lost confidence in the short-term economy and has subsequently occurred twice since. This has preceded every technical recession, defined as two consecutive negative quarters of growth, in the U.S. for the past 50 years. Also weighing on confidence is the fact that the U.S.’s manufacturing sector is already mired in a technical recession. In contrast, other indicators point to a strong economy. The unemployment rate is hovering close to historically low levels, while consumer spending is holding up. Indeed, retail sales rose 0.7 percent in July, beating Wall Street estimates of 0.3 percent, according to the

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