US: Shallow 2023 recession, with downside risks prevailing

En bref

With the Fed's hiking cycle slowing and approaching its end, the two key questions are how much tightening will hurt the economy in 2023 and when it will be reversed. We expect a significant impact, culminating in two quarters of contracting GDP.

Highlights:

  • The US will not escape a mild 2023 recession amid the Fed's fight against inflation. We expect barely positive growth (0.3%), with a contraction in activity in the middle of the year. But unemployment will exceed the Fed's 4.6% YE forecast. 
  • In the final months of 2022, demand has been propped up by household dissaving and increased borrowing. This is unlikely to be sustained and will add to the hit of higher rates on capex and the construction sector.
  • The Fed wows to push the Fed funds rate to above 5% by Q1 2023 and keep it there for the whole year. This commitment will be hard to maintain given the economy's deterioration, and we expect a 50bps rate cut towards the end of the year. The Fed's aggressiveness is the root of the significant downside risks to our growth forecast.
     

Download the full publication below

US: Shallow 2023 recession, with downside risks prevailing
Picture

© Generali Investments, tous droits réservés. Ce site internet est publié par Generali Investments et est considéré comme une communication marketing et une promotion financière liée aux produits et services des sociétés du groupe Generali suivantes : Generali Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. et Generali Investments Holding S.p.A. (ci-après dénommées ensemble Generali Investments). En outre, le site peut contenir des communications de marketing et de promotion financière de produits et services de sociétés faisant partie de la plate-forme Multi-Boutiques coordonnée par Generali Asset Management S.p.A. Società di gestione del risparmio, et en particulier de Infranity, Sycomore Asset Management, Aperture Investors LLC, Plenisfer Investments SGR, Lumyna Investments, Sosteneo Infrastructure Partners SGR et Generali Real Estate S.p.A. Società di Gestione del Risparmio.