Business Cycle Update

Third Quarter 2022

Global Business Cycle Continues to Mature

Most major economies experienced maturing trends in their business cycles due to high commodity prices, general inflation pressures, and tightening monetary and financial conditions. The U.S. is in the late-cycle expansion phase with moderate recession risk, while Europe faces rising near-term recession risks. China shows incipient signs of emerging from its growth recession amid increased policy stimulus.

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

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