US Economy Watch: The Recession That Never Came… Or?
Key takeaways up front:
- We see near-term upside risk…
The current tightening cycle would be the most expeditious in history not to cause a recession, if the hopes of a soft- / no landing hold true. Inflation does however taint the picture, as it effectively curbs the true restrictiveness.
Given developments in energy, early reaccelerations in rent a.o., we see upside risk to inflation and frankly disagree with current FF-futures pricing looking forward 6-12mths.
All eyes remain on the resiliency of the labor market and the US consumer as credit still appears sound – but to reiterate our point made previously: ‘It’s a gradual and then sudden kind of thing’.
Chart 1: Historical tightening cycles