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KEY POINTS Duke University professor Campbell Harvey says the bond yield curve is "flashing code red" for a recession.

The yield for the 3-month Treasury has been above the 10-year since May, a condition known as an inverted yield curve that has predicted the past seven recessions.

Harvey encourages investors, business executives and consumers to prepare now.

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Investors, business owners and consumers should be heeding the message that the inverted yield curve is sending, according to the researcher who pioneered the economic forecasting model. Duke University professor Campbell Harvey said people shouldn't wait for the economic downturn he anticipates before taking preventive measures. "This is the time where you need to reflect upon your strategy. It's actually easy to manage assets when the economy is booming. It's much more difficult to manage into a turning point," Harvey told Josh Brown, CEO and co-founder of Ritholtz Wealth Management and a CNBC "Fast Money" contributor, in an interview for "The Compound" on YouTube. "It's way better to have a plan to go by than to find yourself in a situation where the recession hits and you have to improvise."

Harvey has led work in research on inverted curves, which happen when short-term Treasury yields are higher than those with longer duration. During his research, first revealed in 1986, he found that an inversion between the 3-month and 10-year Treasurys has foretold the past seven recessions since 1950. At that point, there had been four successful cases; since then, three more have occurred. In the most recent cycle, that part of the curve first inverted briefly in March then turned lower again in May where it has stayed since. Harvey said the curve needs to stay inverted for three months to be reliable, so in this instance the duration means the indicator is "flashing code red" for a recession. "It's not normal. It's something that foreshadows bad times," he said. The one bright spot, he said, is that those watching the indicator can, and sometimes do, plan ahead. The inversion is not a coincident indicator but rather one that points to downturns six to 18 months or so in the future. So businesses can react to it, for instance, by delaying spending plans until the storm passes.