Strategy Focus - United States: An atypical landing - November 2022

Besides being the world's leading economy, the United States has also been one of the world's leading performers in terms of GDP and GDP per head since the 2008 crisis.

This outperformance, coupled with massive fiscal and monetary stimulus, helped the US economy bounce back fast after Covid. The unprecedented nature of the crisis and speed of the subsequent rebound created disruptions and distortions which are taking time to work their way through, one notable effect being the leap in inflation.

Today, economic policies are moving back toward normal and this should lead to a desirable slowdown in activity. But some post-crisis disruptions and distortions persist, making it trickier to engineer a soft landing for the economy without prompting a recession..

Besides these cyclical trends, recent years have made existing structural imbalances in the US economy worse, including inequality and external deficits. The effect may make the economy more vulnerable to a deeper recession. For all that, companies’ balance sheets and household finances look robust enough to limit the risks of a major crisis and we remain structurally bullish on the US economy and its financial markets.

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