Approaching a Fork in the Road

The much-anticipated recession of 2023 still isn’t here, and many are beginning to wonder if it will come at all.

On one hand, the pandemic era trends and policies are expected to continue to be more important over the next 12 months when compared to the aggressive rate increases, which could lead to a soft landing for the economy.

On the other hand, a weaker labour market ahead together with excess savings fading away, may spill over into households and constrain spending which could steamroll into a recession

In both recession and soft-landing scenarios, security and sector selection will be very important and income generating assets like fixed income and value equities, are expected to outperform growth assets in the near-term.