What Happens During a Recession in the US, Euro Area, and Japan?

Welcome to this week's edition of our Global Recession Newsletter.   This weekly summary of executive insights provides you with indispensable, 360° guidance for navigating US and European recessions and slowdowns in key economies across the world.   Access the Global Recession hub »   Latest Updates   New Event Announced! - Navigating the Economic Storm: Real-Time Solutions (Nov. 29 | Global Virtual Conference) Join The Conference Board on November 29 to explore the global economic outlook, the path forward for policy makers, and the strategies that businesses can implement to help weather the storm. Members receive complimentary registration. Please register here.   Headwinds to Global Growth Expected to Increase Headwinds to global growth are expected to increase in coming quarters. Global leading indicators point to weakening momentum, and global purchasing manager indexes are sliding and nearing contractionary territory. Indeed, The Conference Board now expects mild recessions to occur in the US and Europe later in 2022 and into early 2023.   The US recession is likely to be induced by aggressive monetary policy tightening in response to elevated inflation, and the recession in Europe likely will reflect surging energy prices and rationing. China may escape recession but will experience weak growth in 2022 due to repeated lockdowns, a housing correction, and weakening external growth, and will experience only a modest recovery in 2023. Our forecast for global GDP is for 2.7 percent growth in 2022 and 1.7 percent in 2023.   What Happens During a Recession in the US, Euro Area, and Japan? Even though exact definitions of recession vary across geographies, broadly speaking a recession can be defined as a significant, broad-based decline in the level of economic activity, typically but not exclusively visible in GDP, employment, and/or other measures of economic activity. However, recessions can vary in terms of intensity, length, and which parts of the economy get hit hardest, with some recessions showing only a mild decline in GDP or simply slower growth than the long-term average.   The recessions that The Conference Board presently forecasts for the US and Euro Area are unique in that they are expected to be relatively mild given the strength of business and household balance sheets and the current strength in labor markets.   Corporate Governance Quality Doesn't Take a Holiday During a Recession A looming recession coupled with accelerated inflation is something boards haven’t seen in decades. The challenge is how to strategically lead organizations through this set of daunting economic conditions to sustainable success. The most direct lever organizations can use is their workforce. For decades, the “corporate line” has been that employees are an organization’s greatest asset, the engine of economic performance. Now more than ever before, directors and executive managers need to quantify and monitor human capital management outcomes if they truly believe that talent is the key to corporate sustainability.   Keeping Your Eye on the Green Digital Ball Amid turbulent times, it is easy to get sidetracked, and innovation can get pushed to the sidelines. However, during challenging times, this is the perfect opportunity to focus on innovation and digital transformation. Most notably, by staying on track with marrying digital transformation with your ongoing green objectives. We offer a two-step process for reaching the goal: first, structure your innovation efforts by tracking signposts, and second, tap into the new opportunities of Green-Digital, embedded within the Signpost framework, to generate value. Learn more about this here.    More Ways to Engage     Tell Your Colleagues Would your colleagues benefit from these insights? Forward this on to them! Forward now »   Join the Conversation   Terms Of Use  |  Privacy Policy  |  Trademarks ©2022 The Conference Board Inc. All rights reserved. The Conference Board, 845 Third Avenue, New York, NY 10022