Economic imbalances could mean deep recession or sticky inflation
A deep recession could have a significant impact on financial markets.
A deep recession could have a significant impact on financial markets.
Even as bank lending tightens, the Fed may still need to keep rates high for longer to bring down inflation.
Given the fragilities in financial markets, the Fed will likely move cautiously in monetary tightening to fight inflation.
Our base case for our strategy remains that a recession will wipe out excess savings, and the relatively low interest-rate environment will return.
Young businesses are a major source of employment, a key variable determining the economic cycle.
In the coming months, the Fed will not likely pivot, but pause and wait with a high level of rates for convincing signs of disinflation.
Limited labor supply, higher wages, and a high staff turnover seems to have initiated a wage-price spiral.
Demographic shifts and labor imbalances might have disturbed consumption-saving decisions that impact inflation.
Recent economic data and the outlook for energy supplies are casting doubt on whether Europe has the resilience to withstand a recession.