“One key precursor for a recession has now fallen into place. Slowing productivity growth means that unit labor costs are now running well ahead of output price inflation… This means a margin and profits downturn is now about to unfold. That typically is a key precursor of recession.”
In the latest issue of ‘Global Strategy Weekly,’ SocGen’s Albert Edwards reaffirms his view that the US is in the midst of a “structural valuation bear market” that typically features a series of economic cycles in its life. These economic cycles reach successively lower lows - each triggered by a recession.
The cyclical picture
Let us understand, from Edwards’ perspective, where we stand in the grand scheme of these cycles. In the chart below, the...
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