Business Cycle Update

Third Quarter 2023

Global Business Cycle in a Less Synchronized Expansion

Many economies face headwinds related to persistent inflationary pressures and tightening monetary conditions. However, the global cycle is not overly synchronized. China's economy continues to benefit from its post-COVID reopening, while Europe has stabilized amid falling energy prices. We believe the U.S. is in the late-cycle expansion phase, with solid near-term momentum but a high probability of greater slowing ahead.

  • 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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