What kind of recession?
• The US economy is likely just entering recession
• Europe, China and Japan are already there
• Central banks risk over-tightening
• The US recession could be mild but prolonged
• Commodity prices are down but still high (Focus p2)
Overview
Whereas US economic cycles normally unfold over 10 years or more, this one looks like being completed in not much more than 2 years, peak-to-peak. The last peak was February 2020 and we are likely at or near a new peak only about 30 months later. We now give a 75% chance to a US recession this year and believe Europe, China and Japan are already there due to the hit from higher energy and food prices.
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