Since the onset of COVID-19 and subsequent global economic shutdowns, accurately gauging the business cycle has become increasingly challenging. In 2022, despite negative real GDP figures, the labor market remained robust, complicating the notion of a recession. The Federal Reserve has implemented significant rate hikes without triggering an outright recession, while stock markets reached new highs. Conversely, the manufacturing sector has faced a downturn, indicated by prolonged contraction in ISM Manufacturing PMIs and deflation in goods. Currently, as the Fed cuts rates in anticipation of labor market issues, early signs suggest a potential recovery. Leading indicators find the manufacturing sector possibly shifting towards growth, with commodities breaking out of a two-year consolidation period. Optimism from businesses seems to be underpinning this uptrend, implying we may be at the beginning of a new business cycle that has so far avoided a recession due to previous fiscal stimuli. Overall, the economic landscape indicates we are not at the end of a cycle but possibly at the start of renewed growth.

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