The Many Roads to Global Recession

Repeated shocks, geopolitical tensions, and restrictive monetary and fiscal policy decisions raise the specter of global recession. While not our base case forecast, the occurrence of one extreme event, or even a combination of several smaller unfavorable events, could thrust the world back into recession following the spectacular recovery from the pandemic. 

The Conference Board has modeled plausible scenarios that might lead the global economy, as well as individual economies, including the US, China, and the Euro Area, into recession within the next 18 months. We also consider “stagflation”—a prolonged period of very low growth and high inflation—which on a spectrum of bad events is just as undesirable as recession. (see StraightTalk® The Many Roads to Recession)

Currently, we posit the US will fall into a shallow, yet brief recession before the end of 2022, prompted by aggressive Fed monetary policy tightening. Euro-Zone growth may slow to zero reflecting surges in energy prices as Russia cuts off natural gas supplies and supply chain disruptions linked to the war in Ukraine continue. (See The Conference Board Economic Forecast for the US Economy and Europe outlook.)