We believe the likelihood of a recession starting in 2023 has been increasing. While the Federal Reserve has not explicitly forecast a recession, the rising unemployment rate shown in the Fed’s quarterly Survey of Economic Projections is consistent with a recession forecast.

US GDP rose in Q3 2022 and seems likely to rise mildly in Q4 2022. We have been seeing signs of weakness in the economic data, including in the housing sector, business equipment investment, exports, consumer spending and inventory investments.

Globally, we find the recession risk in Europe to be extremely elevated. In our opinion, China’s easing of COVID-19 lockdown restrictions could lead to a bumpier road to recovery than many are expecting.

By The Loomis Sayles Macro Strategies Group

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