Macro Briefing: 16 January 2023

* Treasury Sec. Yellen says US will reach its debt limit within days
* China’s reopening could boost the world economy
* US Treasury Secretary Yellen will meet Chinese vice premier this week
* Economists still see elevated US recession risk via Wall Street Journal survey
* Earnings expected to take center stage for stock market in coming weeks
* Warm winter reduces bite of Russia’s energy war on Europe
* US Treasury market yields fall so far in 2023, in contrast to last year’s start
* India’s head of central bank asks for ban of crypto
* Richest 1% accumulate nearly two-thirds of new wealth created in last 2 years
* US Consumer Sentiment Index rebounds in January to 9-month high:

Despite signs that the US economy is headed for a so-called soft landing, “a recession really is coming,” predict co-founders of the Economic Cycle Research Institute (ECRI). “Recessions always entail noticeable declines in both GDP and jobs, but such pullbacks are not necessarily obvious at the recession’s outset,” write Lakshman Achuthan and Anirvan Banerji. “While GDP and jobs do move in step with the economy, by the time they are released, they only tell us where the economy had been in the recent past.” They add: “Employment, in particular, can hold up longer than expected in a recessionary scenario. That was true in the inflationary era around the 1970s. Most notably, employment didn’t peak until eight months after the start of the severe 1973-1975 recession. The reluctance to let employees go back then, and in today’s economy, could be due to the “money illusion,” where business owners tend to view their revenues in nominal dollar terms instead of recognizing its real value, adjusted for inflation.”