Are we heading for a recession? The short answer is, yes. The longer answer is that while growth is decelerating (from 5.8% to around 3.9% expected in 2022), the probability of actually dipping into a recession in the next 12 months is still extremely low, though that probability clearly rises the longer the recovery continues. The probability also increases significantly as the Fed’s tightening cycles get underway, given it has a poor track record of successfully engineering soft landings.
Thus, with interest rate lift-off starting in March, in the coming quarters the recession debate is one that will only continue to heat up and, you guessed it, will be another ongoing source of financial market volatility. With this in mind, in this Economics Weekly, we highlight some of the key indicators that we will be paying attention to as this debate increasingly gets underway.
For a copy of this report or to subscribe to the Economics Weekly or Economic Indicators reports, please contact your William Blair representative.
Richard de Chazal, CFA, is a London-based macroeconomist covering the U.S. economy and financial markets.