Something reminiscent of the recession of the period 2000-2001, only slightly stronger in scale. Despite the fact that in the United States we have already seen two consecutive quarters of falling GDP in a row, a full-fledged recession is not enough for an increase in unemployment and a drop in company profits. We expect to see something similar in the US sometime around the 2nd quarter of 2023.
This scenario currently does not meet the expectations of the market, which expects a slowdown in growth rates, but not a fall. If you look at the estimates we listed above, the consensus assumes that the company's profits will grow by an average of 5% in 2023. Also, analysts of large investment houses expect a slowdown in GDP growth in the US, but not its fall. As for the treasury bond market, the spread between 5-year and 30-year bonds is growing, so the market is clearly not predicting a recession, but is waiting for a slight decrease in GDP growth.
In this scenario, which we assess as the main one, inflation in the US in 2023 will indeed drop to 4-5%, which the market expects, but maybe even more. As history shows, a recession is the best cure for inflation. As for the Fed, we expect the rate to peak at 5-5.25%, but closer to the third quarter of 2023, the Fed will face a serious recession, against which the regulator will cut rates quickly. Faster than the market expects now, up to 3-4%.