US economy key to global economy
Hofer, 23. Maxim Hofer has a DIP degree in business economy (MA) and a senior consultant and senior consultant, “Recession Risks: The Global Impact of a US Hard Landing Scenario,” https://www.euromonitor.com/article/recession-risks-the-global-impact-of-a-us-hard-landing-scenario, Euromonitor International, 4-6-23 – accessed 6/22/23
In this US hard landing scenario, businesses will reduce investment and hiring while increasing layoffs, as tighter lending standards, rising borrowing costs and weakening demand put pressure on profit margins. At the same time, consumers will significantly cut back on spending amid persistent inflation, deteriorating income prospects and rapidly eroding pandemic-era excess savings. With consumer spending being the main driver of the US economy, this scenario will lead to a recession. With the US as the largest economy globally, a hard landing scenario will have widespread spillover effects. Consequently, other major economies will also register a decline in real GDP growth in 2023 compared to the baseline, as will the global economy overall. In 2024, there will be a diverging trend with China already posting an increase compared to the baseline real GDP growth, while the US, the Eurozone and the global economy as a whole remain below baseline growth. In terms of real GDP growth rates, the US hard landing scenario will tip both the US and the Eurozone into recession in 2023, with the US even remaining in a recession in 2024.