Financial Stability Concerns to Tip the Balance Towards a US Recession

Monday 03 April 2023

Cross Asset

Financial Stability Concerns to Tip the Balance Towards a US Recession

April 2023 | The recent stress in large parts of the US banking sector is significant—it adds to pressure on funding costs and profitability stemming from the fastest monetary tightening on record as well as the protracted period of an inverted yield curve. These stresses will constrain many banks' ability to lend, and will have a material impact on the outlook. As a result, we are revising our US forecast. We now expect a more protracted recession during the course of 2023 rather than mild weakness.

01 | Recent stress in parts of the banking sector will raise funding costs and reduce lending to many sectors.

02 | We now expect the US economy to shrink by -1.1% in 2023, driven by a contraction in domestic demand.

03 | Eurozone growth should stagnate as inflation remains high.

Cross Asset - April 2023

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of April 03, 2023. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi US and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. Amundi Asset Management US is the US business of the Amundi Asset Management group of companies.

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