Recession

Broken supply chain, due to war started by Russia, sanctions and energy crisis already raised inflation in Euro area to the level which haven’t been seen within the last decade. Would it lead to recession in EU, USA or global in 2023?

Recession is probably the major threat seen by executives for the started 2023. Word recession in global news peaked last year during June-July time according to google trends. That peak is higher than it was during Covid onset (Mar 2020) and similar to US-China trade war (Aug 2019) times.

US recession by the latest survey of business and academic economists from WSJ has 61% probability.

Same experts expect the GDP growth to stagnate in 2023 with 0.2% growth in Q4 2023 vs 2022.

The Economist points out to the surest indicator of recession - gap between ten-year and three-month Treasury yields which is when negative 8 out 9 times have been followed by a recession.

However Goldman and Sachs in their 2023 outlook set probability for US recession about 35%, while Euro Area and UK are in recession.

Bloomberg collected 175 summaries from various analytic firms. Below is a quick sentiment analysis of those summaries, should be taken with grain of salt though. Clearly the key indicators to watch will be: (1)how FED and ECB will fight inflation, (2)what will be the evolution of war conflict in Ukraine and (3)how China will reopen.