November 2022 Commentary: A Fork in the Road

Summary

• Two of the most powerful economies in the world, the U.S. and China, are both facing critical decisions, and their choices will create ripple effects for global economic growth.
• Since the start of the pandemic, China has been beleaguered by a rapid slowdown in economic growth, weak consumption, a collapsing property market, vast capital outflows, and rising public dissent against the consequences of the government’s ongoing strict COVID-zero strategy, and President Xi Jinping must now steer his country into an uncertain future.
• U.S. Federal Reserve Chairman Jerome Powell has also endured a difficult time, and he now faces a choice between easing rate hikes or continuing to tighten monetary policy, which could possibly push the U.S. into a recession.
• Inflation in the U.S. appears to be cooling, but economic and earnings growth are also starting to slow. The pace at which growth slows relative to inflation remains key for whether the U.S. will be able to avoid a recession.

Read and download the commentary here.