Business Cycle Update

Fourth Quarter 2021

Global Expansion Still Broadens Amid Growing Crosswinds

The broad trend of mid-cycle expansion continued for many major economies, including the U.S. and Europe, with economic reopening generally supporting activity. However, supply constraints and disruptions sapped some growth momentum, and many developing countries remained inhibited by their more limited vaccination and reopening progress. China slipped into a growth recession amid significantly decelerating activity.

  • 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 China U.S. Eurozone, UK, Australia, Canada Japan, Korea Brazil, India, Mexico

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