Business Cycle Update

Fourth Quarter 2022

Strengthening Headwinds for Global Business Cycle

Most major economies experienced maturing trends in their business cycles due to high commodity prices and inflationary pressures, slowing industrial activity, and tightening monetary and financial conditions. The U.S. is in the late-cycle expansion phase with rising but moderate recession risk. Europe has likely tipped into recession, and China's increased policy stimulus has yet to pull it out of its growth recession.

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

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