Markets enjoyed a positive bounce last week as economic data including the US non-farm payrolls (more information below) suggested there was still fuel in the tank of the global economy. Yes, economic growth looks to be slowing now, but as reported by numerous commentators over the weekend, a slowdown is not the same as a downturn.
Whilst recession is not a base case, it is garnering more attention. With that in mind, it may be useful to recap what a recession is. It has typically (including in previous editions of the Weekly Investment News) been characterised as two consecutive quarters of negative GDP growth. However, the National Bureau of Economic Research (NBER) are the guys who officially declare a recession in the US. Their guidance is less definitive, and references phrases such as ‘a significant decline’ and ‘a few months’. As mentioned, none of the above may come to pass, but we might see the NBER rulebook been dusted off and examined at some point in 2023 as markets debate the consequences of tighter monetary policy.
Whilst this is not a political note, we did (sort of) see the resignation of Boris Johnson last week as a raft of Tory MPs jostle to take a run at the party leadership. Many commentators have noted with a wry smile that it’s now three Prime Ministers in a row that have been forced from office by Boris Johnson. From an investment perspective, we could see a change in economic policy from a new leadership which will no doubt have implications for the UK economy.
