In an interview with CNBC this week, chief executive of financial advisory firm Longview Economics Chris Watling said that  judging from its “brutally bad” economic data, the US is on the cusp of an economic recession.

The economic strategist pointed to two factors affecting his decision, one being the latest reading on the Leading Economic Index for the US, which dropped 1.2% in March, hitting the lowest level seen since November 2020.

Second, he pointed to the fact that recessions usually occur approximately one year after the Treasury yield curve inverts, when shorter dated securities see their yields rise above the yields of longer-dated securities. Because the curve inverted first in March of 2022, Watling says the economic contraction could be in the immediate short-term.

He said, “Every time you’ve had that in the US, you’ve had a recession. So, I think it’s coming, it’s on its way. It’s just a timing issue.”

Last month, the inversion became even more pronounced, hitting negative 103.1 basis points, which was the biggest spread between shorter and longer term yields since September of 1981, at the beginning of a recession.

Watling also warned of the effects the recession will have on the stock market.

He warned, “They won’t come through it unscathed in our opinion. I’m not even sure about relatively. The reality is if you look at profit margins, they went to record highs in 2021 and a bit of 2022, and of course when you have a lot of inflation around, you can get very good operating leverage so you can get record high profit margins. When you get into recession, we’ve got to do a double hit on profit margins. You’ve got to normalize them back to normal levels and then you’ve got to price in a recession.”

Watling noted earnings expectations are presently “way too optimistic,” considering where it appears the economy will be heading.