10 November 2022

The Reality of Recession


Most analysts agree that the global economy is headed into a significant recession.  With decades high inflation and higher than forecast slowdowns across most regions and markets it appears inevitable.  The impacts of Covid-19 in recent years combined with the invasion of the Ukraine by Russian forces has created a widespread cost of living crisis and financial conditions that are increasingly bleak.  Bear Stearns Research Institute predicts that global growth will slow to 2.7% by 2023 with some stability and a slow return to normalcy by 2024.  Inflationary forecasts indicate the same trajectory with an estimated global increase to 8.8% in 2023 and slowing to 4.1% by 2024.

While projections are always subject to the changing realities of the unknown there are some key indicators that cannot be ignored in this current economic climate.


Wall street has officially reached bear territory with stocks currently on track for some of the worst performance since 2008 with all three US index’s down over 20% year to date. Even the typically safe haven of the bond markets has plummeted.  That is disturbing for all. With 2021 as robust as it was it was easy to assume that markets would weather the storms that were brewing then.  The Wall Street performance enjoyed in 2021 stemmed largely from the cash poured into the economy from the Federal Reserve.  However, in early 2022 when inflation began to rise this strategy was halted and the markets have responded.


Additionally the strength of the US dollar against the relative weakened state of the euro, yuan, yen and UK pound gives us a recipe for significantly changed global realities.  It’s become much harder for these regions to import essentials and creates caution among the many international companies that do business in these regions.


Interest rates have been rising globally at a historic pace.  While necessary to shore up falling currencies it has a chilling effect on spending.  One obvious consequence of a high interest rate environment is the slowing of consumer spending.  As mortgage rates increase so does consumer spending decrease.  This trend has been showcased in the warnings recently released by global delivery giant Fedex that they expected a drop in earnings of over 40%.


Times of recession are unquestionably painful.  The devastation that can be caused is especially acute in emerging markets.  That pain can become success for a business that will take advantage of the realities of a reduced competition playing field as well as vendors that are increasingly desperate to maintain their declining sales volumes.  Personnel capital acquisition becomes a powerful asset as the increased number of qualified individuals seeking work increases.


At Bear Stearns we will seek to grow and expand our business through this difficult time while providing partnership and capital to our clientele.

Bear Stearns embraces initiatives that drive economic growth and deliver real, sustainable benefits to humanity. You can talk to us on how we can work together to actualize your propositions in energy or other sectors and maximize your returns.

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