How Bumpy Is It Going to Get? Mapping Recession Scenarios
With a recession looming, many are working to predict its length and severity. In this paper, FMI outlines three potential scenarios for a recession and the possible outcomes for the engineering and construction industry. Read this alongside our third quarter Outlook.
Given the current conditions, we have developed three potential scenarios for the economy:
- Base case: Monetary tightening reinforces economic contraction with a large hit to the job market and asset prices resulting in 12 to 18 months of recession.
- Better case: A somewhat controlled soft landing results in six to 12 months of recession.
- Worse case: Economic events as outlined in the base case become severe enough to unify accommodative actions of the Federal Reserve and U.S. government to create stimulative policy and other conditions for prolonged and higher inflation, resulting in two or three years of contraction.
With these example scenarios in mind, firms can better strategize for different economic outcomes, understanding that knowledge of their own sectors and geographies will be key to acting.
