Business Cycle Update

Second Quarter 2023

Less Synchronized Global Business Cycle

Many economies face headwinds related to persistent inflationary pressures and tightening monetary and financial conditions. However, the global cycle has become less synchronized, with China accelerating amid a post-COVID reopening and Europe stabilizing amid falling energy prices. We believe the U.S. is in the late-cycle expansion phase, with a significant likelihood that recessionary pressures may increase in 2023.

  • Activity rebounds (GDP, IP, employment, incomes)
  • Credit begins to grow
  • Profits grow rapidly
  • Policy still stimulative
  • Inventories low; sales improve
  • Growth peaking
  • Credit growth strong
  • Profit growth peaks
  • Policy neutral
  • Inventories, sales grow, equilibrium reached
  • Growth moderating
  • Credit tightens
  • Earnings under pressure
  • Policy contradictory
  • Inventories grow; sales growth falls
  • Falling activity
  • Credit drives up
  • Profits decline
  • Policy eases
  • Inventories; sales fall
BCU InflationaryPressuresRed =HighRelativePerformanceofEconomicallySensitiveAssetsGreen =Strong+EconomicGrowth-RECOVERYCONTRACTIONEXPANSION India, Mexico Japan U.S., Australia, Canada, Korea, Brazil Eurozone U.K. China

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