Sharply higher interest rates, red-hot inflation and a prolonged energy crisis are leading to conviction; that the world economy is headed inexorably towards recession.
It’s a risk U.S. Treasury Secretary Janet Yellen and European Central Bank chief Christine Lagarde have acknowledged even if neither considers it a baseline scenario. Federal Reserve chief Jerome Powell rejects the notion.
Paul O’Connor, head of the multi-asset team at Janus Henderson, notes that since 1955 “the U.S. Economy has always experienced a recession within two years from every quarter in which inflation was above 4%; and unemployment was below 5%, as they are today.”
The International Monetary Fund this week warned inflation and war may push the world economy to the brink of recession.