美國衰退風險：

從「會否」轉為關注「何時及如何」發生

僅提供英文版本

A 2023 recession is more or less the consensus forecast for the US economy at this point. However, most market participants seem to believe the US can avoid the dreaded “hard landing” scenario as the labor market remains tight amid robust domestic consumption. We disagree and believe the US economy is likely to falter meaningfully in 2023, with the risk of many resulting job losses. 

Remember, employment data is a lagging economic indicator, and our own review of high-frequency job openings data points to a likely deterioration in the US labor market that will potentially manifest within nonfarm payrolls and jobless claims data for the first half of 2023 (Figure 1). 

It’s largely about corporate profits

The main pushback we’ve received against this view is that many US companies were super-keen to hire employees only six months ago, so they are unlikely to switch to cutting jobs so quickly. True, but what this argument misses is that US corporate profits look poised to fall sharply in the coming quarters.

Economy-wide corporate profits can be defined by a macroeconomic identity called the Kalecki-Levy Profits Equation, which equates profits to economy-wide consumption relative to savings:

Profits = Investment – Household Savings – Foreign Saving – Government Saving + Dividends/Share Buybacks

Using this equation, it is easy to see why US corporate profits have been so robust since the onset of the COVID pandemic. In 2020 – 2021, government spending vastly exceeded the increase in household savings that occurred during the pandemic. In 2022, as government spending receded, households drew on their savings, boosting consumption and therefore corporate profits too. However, these positive tailwinds for profits are now beginning to reverse:

• Corporations are unlikely to buy back shares or invest in capital expenditures given today’s much higher interest-rate environment.
• The household savings rate is currently 2.4%, close to its lowest level ever. With a weakening housing market and less excess savings to tap, that number is likely to rise.
• Government spending is unlikely to help drive profits given the split Congress that emerged from the 2022 midterm elections.
• The now-strong US dollar probably means that the current-account deficit will stay negative well into 2023.

Final thoughts

All these factors suggest a negative outlook for US corporate profits in 2023. One rebuttal to this view is that profit margins are close to record levels, allowing room for them to come down without companies needing to slash employee headcount.

However, the US has had very low levels of productivity growth due to insufficient nonresidential investment over the past decade, meaning it won’t be so easy for many companies to maintain their margins. At the same time, companies with the highest margins have benefited from the market rewarding their stock prices relative to more cyclical businesses. Considering that market reaction, rather than take a hit to their margins, the more natural thing for management teams to do would be to just lay off employees — a trend we’re already starting to see in the tech sector. 

Bottom line: We think many observers are underestimating the deterioration in the labor market that could occur due to worsening US profits in 2023. As a result, they may also be underestimating the severity of the recession that the US economy is likely to experience this year.