Tommy Kalikas, Peter Tuchman. Traders Tommy Kalikas, left, and Peter Tuchman work on the floor of the New York Stock Exchange, . Technology stocks were leading indexes higher on Wall Street after the U.S. gave Chinese telecom giant Huawei another 90 days to buy equipment from American suppliersFinancial Markets Wall Street, New York, USA - 19 Aug 2019

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 Commerce Department. When volatile items such as gasoline were removed, the numbers were even better — up 1 percent.

“The further inversion of the yield curve — with the 10-2 year spread briefly inverting last week — has heightened fears that a recession is coming soon, but the real economy shows few signs of any imminent capitulation,” Paul Ashworth, chief U.S. economist at economic consultancy Capital Economics, said in a note to clients.

It stressed that aside from industrial production, which is falling because of the manufacturing recession, the other three coincident indicators — non-farm payrolls, personal income and real business sales — that the National Bureau of Economic Research uses to date economic cycle turning points are still trending higher.

“Moreover, although the yield curve is the best single leading indicator of recessions two to three quarters ahead, none of the other key indicators — building permits, jobless claims and the stock market — show any sign of an economic contraction developing,” it added.

Not everyone is optimistic. According to a recent survey by the National Association for Business Economics, the majority of economists believe a recession is coming, although not in 2019.

“Of the 98 percent of respondents who believe a recession will come after 2019, the panel is split regarding whether the downturn will hit in 2020 or 2021,” said Constance Hunter, NABE president and chief economist at KPMG.

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