In a 1964 First Amendment case, commenting on the subjective definition of “hard-core pornography,” then-Supreme Court Judge Potter Stewart famously said: “I know it when I see it.”

You could apply that comment to recessions. There are no hard-and-fast rules about what constitutes a recession. We’ll know it, when we see it.

But don’t wait for a starting gun to officially mark the onset of a recession. By the time it’s announced, we’ll likely be in the middle of it.

Recessions in the U.S. are officially declared by a committee of eight economists at the private, non-profit National Bureau of Economic Research (NBER). The metrics applied, e.g., two consecutive quarters of negative gross domestic product (GDP) growth, tend to be backward looking.

The NBER committee takes its sweet time in making an announcement, often as much as a year after a recession has actually started.

The U.S. economy contracted in the first quarter of 2022 after robust growth in the fourth quarter of 2021. However, even if the next GDP report this month shows a decline in Q2, many analysts will be reluctant to announce a recession because the jobs market is in solid shape.

Recession fears continue to weigh on stocks, with the major U.S. equity indices declining Tuesday as follows: the Dow Jones Industrial Average -0.62%; the S&P 500 -0.92%; the tech-heavy NASDAQ -0.95%; and the small-cap Russell 2000 -0.22%.

The U.S. Labor Department reported Wednesday that the consumer price index (CPI) in June rose 1.3% (month-over-month). The CPI rose 9.1% over the last 12 months, above expectations for 8.8%. The index for all items less food and energy increased 0.7% in June, and was up 5.9% over the year versus estimates of 5.7%.

In pre-market futures contracts Wednesday, U.S. stocks were tumbling on the bad inflation news.

Read This Story: Keep Your Eye on Oil

Crude oil prices have plunged this month, as worries about the global economy worsen. Projections about falling demand, due to an economic slowdown, have become a more important dynamic than tight supply. The following chart tells the story:

The oil markets are getting buffeted by competing pressures. The Russia-Ukraine war has contributed to supply problems, but red flags about a recession are putting demand into doubt.

The average national price of unleaded gas in the U.S. peaked at about $5 last month. As of this writing Wednesday, the price hovered at $4.63/gal.

That said, still-elevated gasoline prices will play a big role in the midterm elections. President Biden on Wednesday left for a four-day trip to the Middle East. At the top of Biden’s agenda is to persuade OPEC to throw open the crude oil spigots.

Regardless, Wednesday’s hotter-than-expected CPI report for June will probably prompt the central bank to hike the fed funds rate another 75 basis points during this month’s meeting.

Dr. Copper falls ill…

COVID-induced lockdowns in China, and hawkish central banks around the world, are dampening sentiment in commodity markets.

Significantly, copper prices have plummeted to their lowest levels since 2020. Copper is a widely used commodity so sensitive to economic conditions, it’s viewed as a leading indicator. Because copper is a time-proven predictor of economic trends, the metal is said to have a PhD in Economics.

Hence the metal’s nickname “Dr. Copper.” And the doctor is ailing, a clear sign that the global economy is heading for a rough patch.

Meanwhile, the U.S. 10-year Treasury yield has fallen below 3.0%, well off its highs of about 3.5% in mid-June.

The yield curve, the difference between the 10-year and two-year yields, currently hovers at around -0.08%, the most negative it has been so far this year.

An “inverted yield curve” occurs when short-term interest rates are higher than long-term interest rates. An inverted yield curve is considered a leading indicator of recession.

A normal yield curve is one in which longer maturity bonds have a higher yield compared to shorter-term bonds, because of risks associated with time. If they sense a recession is on the way, many investors will start to invest in long-term U.S. Treasury bonds, because they’re pessimistic about the short term. Bond prices and yields move in opposite directions.

Keep in mind, though, that there’s usually a lag time of six to 18 months between the occurrence of an inverted yield curve and an actual recession.

PS: When we’ve put inflation, war and the pandemic behind us, certain companies will explode on the upside, especially in the beaten-down technology sector.

Indeed, the next wave of technological innovation is poised to take off. Looking for the stock market winners of the future? Click here for details.

John Persinos is the editorial director of Investing Daily.

Subscribe to John’s video channel: