U.S. Economic Outlook 2023 - A 'soft landing' or 'deep recession?' Teneo Insights
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U.S. Economic Outlook 2023 A 'soft landing' or 'deep recession?' Teneo Insights March 2023
U.S. Economic Outlook 2023 Foreword The U.S. economy is currently experiencing levels of inflation that have not been seen in 40 years. Supply chain disruptions, rising global commodity and energy prices, volatility in major economies and underlying demographic factors have all contributed to rising prices. To manage this, the Federal Reserve has reacted quickly, raising interest rates earlier and more aggressively than any other major economy. In this paper, Teneo utilizes a combination of modelling, detailed analysis and commentary from highly respected advisers across a range of subjects, including politics, economics and consumer demand, to develop a comprehensive view of how the challenges the U.S. economy faces are likely to evolve in the next 12-18 months. Included are forecasted key macroeconomic factors such as inflation, GDP and employment, and considerations of a wide range of implications for businesses, including consumer spending and behavior patterns, as well as employment, rising inventories and access to credit.
U.S. Economic Outlook 2023
Contents
Executive Summary 04
The Current Situation 07
Overall Outlook 11
Outlook Across Key Economic Metrics 15
Sector-Specific Outlooks 24
Comparisons 32
Executive Summary
Executive Summary Negative outlook Moderate outlook Positive outlook
Soft Landing Mild Recession
The Fed’s current policy is effective, The Fed decides that further interest
While there is evidence of growth against a backdrop inflation returns to pre-2022 levels, and rate rises and/or the Fed’s current
consumer output increases as real wages policy results in more slowdown than
of global uncertainty for the U.S. economy, there trend upwards. As a result, the U.S. does anticipated and the economy enters
remains a very real risk that the U.S. could be about not enter a recession but experiences recession beginning in Q4 2022 and
12-18 months of slow growth. lasts 3-4 quarters.
to enter a prolonged recessionary period.
The U.S. government is currently trying to navigate its economy Inflation1 2-3% 2-3%
through a challenging inflationary period and orchestrate an outcome
that has never been achieved. In other words, manage the dual Interest rates2 2-4% 2-5%
challenges that rising inflation and rising interest rates have on
economic growth while avoiding a recession and achieving its fabled GDP3 0-2% -1-0%
soft landing.
Duration n/a 2-4 quarters4
Positive indicators point to its achievability – inflation is down, the
labor market remains strong. Despite evidence of declining real Overall outlook è/ì è/î
wages, this has not yet translated into declines in household
consumption. The line between a soft landing and a recession is thin.
Deep Recession Long-term Inflation
Consumer confidence is at record lows, and the U.S. is seeing the Greater downside than forecast. Inflation remains high despite fiscal
biggest real wage declines in the wealthiest income brackets, which Potentially driven by instability in the job policy intervention from the Fed. The
make up the majority of consumption. or housing market, leading to a reduction economy may not enter a recession;
in consumer spending or geopolitical however, it could result in a prolonged
In this paper, we outline four potential economic scenarios for the U.S. factors keeping prices up. This would period of slow or declining growth (well
going forwards; from a soft landing to the risk of long-term inflation result in a steeper decline in GDP and into 2024) as wages fail to keep up
likely last 4+ quarters. with prices.
and a deep recession.
While there is cause to be optimistic about the U.S. economy, there Inflation1 2-4% 4-5%
remains a significant macroeconomic uncertainty, with the very real
possibility that the economy could be about to enter a deep and Interest rates2 2-5% 5-6%
lengthy recession.
GDP3 -2-4% -1-1%
Source(s): Teneo Research & Analysis Duration 4+ quarters4 4+ quarters4
Note: 1Levels of Inflation forecast for December 2023, 2Interest rate outlook as of
December 2023, 3Annual GDP growth outlook for 2023, 4Following the
commencement of the recession Overall outlook î î
5
Executive Summary
Where the U.S. lands Six Key Takeaways
within this range of
outcomes depends
materially on how
quickly inflation
returns to target
levels. Prolonged high
inflation will have a
substantial impact on
consumption, which While we expect to see a material Interest rates are expected to remain Real wages fell across 2022. Without a
could tip the U.S. into softening on inflation in 2023 high across 2023. While they will help in material softening of inflation towards the
a recession. compared to 2022 figures, there is a managing inflation, they will also continue 2% level, we will see real wages continue
real risk that inflation remains at the 4-5% to impact borrowing and activity in the to fall across 2023. The U.S. bucks the
level for the foreseeable future. This is housing market. This is, in itself, a risk to global trend with more well-off home
impacted by wage pressures, continued the long-term stability of the U.S. economy. owners seeing larger declines.
geopolitical turmoil and lack of interest However, a repeat of the previous housing
rate effectiveness. crisis is extremely unlikely.
Real wage declines coupled with low Unemployment is expected to stay While inflation has fallen significantly over
consumer confidence will translate into a below 5% in 2023; however, supply- the past few months, further falls at this
drop in consumption. This is expected to side shortages within the labor magnitude and/or even greater levels will
be most acute in higher income groups, market risk driving further inflation as likely be required to avoid a recession. But
which have seen the largest declines in upwards pressure on wages continue. this is by no means guaranteed.
real wages.
Source(s): BLS, Reuters,
Factset, Teneo Research
& Analysis
6
The Current 2022 saw levels of inflation
Situation
reach a 40-year peakThe Current Situation
The U.S. is currently U.S. Consumer Price Index; 1980-2022
facing a period of Consumer Price Index Target Inflation Rate
intense inflationary 16%
challenge, with the
highest rates of 14%
consumer price 12% CPI is at its highest level in 40
rises in over 40 years
10% years for the U.S. economy 8.0%
and interest rates
rising steeply. 8%
6%
A confluence of factors,
including the aftermath of 4%
the supply chain disruptions
2% 2%
and costs relating to the
COVID-19 pandemic, 0%
underlying demographic
challenges and the ongoing -2
impacts of the Russia- 1980 19831980s1986 1989 1992 1990s
1995 1998 2001 2000s
2004 2007 2010 20132010s2016 2019 2022
Ukraine conflict on energy Source(s): Bloomberg, BLS
and commodity prices, have
driven U.S. inflation to a 40-
year high.
Energy Commodities Pent-up demand Structural demographics
There have been significant increases The Russia-Ukraine conflict, along with Following COVID-19, there was an A tight labor market, caused by a
in energy prices driven by the Russia- supply chain issues caused by COVID- unwinding of pent-up demand in the shortage of workers and cultural shifts
Ukraine conflict and subsequent 19, has created shortages and rising form of delayed purchases. This in the workplace, has meant that
sanctions. Fuel oil prices increased by commodity prices. increased demand and prices for many businesses have had to increase
65.7% in the 12 months to In 2022, the average wheat price was goods and services as U.S. wages to retain and/or hire workers.
November 2022. 35% higher than in 2021. households spent from their $2.1 To accommodate this increase in wage
trillion excess savings accumulated cost, businesses are forced to raise
during the pandemic. prices, thereby contributing to inflation.
Source(s): JP Morgan Asset Management, Macrotrends, Teneo Research & Analysis
8The Current Situation
To control inflation Effective Federal Funds Rate; 2018-2022
and bring it back
down towards the U.S.
5% 4.33%
government’s target, Following rising inflation over the last 12 months,
the Fed has begun the U.S. Fed has raised the interest rate seven times
raising its fund rate. 4% in the past year to its highest level in 15 years
While raising the fund
rate helps to lower 3%
inflation, it also slows
the economy down
2%
and dampens growth.
1%
0% …
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2018 2019 2020 2021 2022
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11
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1/
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7/
9/
Source(s): Bloomberg, Federal Reserve
How interest rates manage inflation and
preserve the value of currency:
Source(s): JP Morgan Asset
Management, Macrotrends,
Teneo Research & Analysis Inflation: Currency:
Note: 1The Federal Reserve Higher interest rates increase the cost of borrowing, In addition to reducing inflation relative to other
increased the fund rate further in turn reducing overall spend. Reduced demand for countries, higher interest rates in the U.S. offer
on the 1st February 2023, to an
goods and services forces prices to increase more lenders greater return relative to other countries,
effective rate of 4.58%. This sits
outside the time-series shown slowly, curbing the rate of inflation. thereby attracting foreign investment and causing
on the graph the exchange rate to rise.
9The Current Situation
High inflation and
rising interest rates
are translating into
negative headwinds
across leading
consumer and Unemployment
Wage Growth and Real Consumer Confidence
business indicators,
Disposable Income Consumer confidence has deteriorated
putting the U.S. at a This is in the context of a tight labor
against a backdrop of declining real 3.7% market, with unemployment standing
growing risk of Although strong wage growth has
recession.
5.1% been observed, standing at 5.1% in
disposable income. Consumer confidence
at 3.7% (Nov 2022), down from 4.5%
is currently lower than at any point during
Nov 2022, it is still well below (Nov 2021). Upwards wage pressure
the COVID-19 pandemic and the Global
With price increases inflation. created by labor shortages risks driving
Financial Crisis.
outpacing wage growth and This translates to a decline in real inflation further.
resulting in declining real -2.0% disposable income (-2.0% Nov
wages, consumers are 2021 to Nov 2022), eroding the
seeing their household purchasing power of consumers.
budgets squeezed. As
household incomes fall in
real terms and consumers
have less money to spend,
there is already growing
evidence of negative
headwinds across leading
indicators of business
output and household
consumption in the U.S.
Profit Margins Business Confidence Inventories
Taken together, these The net profit margins for the S&P 500 Business confidence has declined Business inventories have been rising
indicators are linked to a have declined for five consecutive YoY, with current levels reminiscent throughout 2022 and were 16.5% higher in
slowdown in GDP. quarters, from 13% in Q2 2021 to 12% in of those seen during the U.S.-China October 2022 compared to 12 months
Q3 2022. trade war in 2019; however, it is still prior. This is indicative of slowing demand
higher than the levels seen during and a worsening cash position for
the GFC. businesses.
Source(s): BLS, Reuters,
Factset, Teneo Research &
Analysis
10Overall An economic slowdown is
Outlook
expected as we enter 2023Overall Outlook
While the U.S. is seeing Real GDP growth forecast, % Q1 2021-Q2 2024 Teneo Forecast Range
an economic slowdown
with a recession as a GDP change from preceding quarter at annualised rate1 (%) Actual
very real possibility, Forecast (Congressional
there are diverging 8.0% Budget Office)
views on what the Forecast (Federal Reserve)
economic outlook 7.0% Forecast (OECD)
Historic Forecast
looks like for the next
12-18 months. 6.0%
There is broad consensus
that the U.S. is likely to see 5.0%
an economic slowdown in Q1
2023 as the impacts of the
Federal rate rises from late 4.0%
2022 start to feed into the
economy; however, there is a 3.0%
significant divergence with
regards to the quarters
that follow. 2.0%
In a best-case scenario, the
U.S. will likely see a ‘soft 1.0%
landing’ with low/slow growth
across 2023 before picking 0.0%
up in 2024. However, a Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024
downside scenario is a real
possibility and could see the -1.0%
U.S. enter a prolonged
recession lasting well into
2024, as is currently forecast
-2.0%
for the UK and Germany.
Over the following pages, we -3.0%
assess the different scenarios 2021 2022 2023 2024
that are likely to dictate where
the U.S. economy lands Source(s): BEA, OECD, CBO, Federal Reserve, Teneo upper and lower bound based on consolidation of forecasts
(Conference Board, TD Economics, Bloomberg, SPF, Deloitte), Teneo Research & Analysis
within these ranges.
Note: 1Seasonally adjusted
12Overall Outlook
Actual GDP growth will likely be dictated by a small
number of key factors. Highly likely / high magnitude Likely / medium magnitude Unlikely / low magnitude
Potential Further raising of Slower-than- Declines in Weakening labor Potential housing Unforeseen External geopolitical Change of
downsides interest rates by expected inflation consumer spending market market distress instability in the factors Government in 2024
the Fed deceleration financial markets
Description The Fed has committed Despite interest rate Consumer spending is The U.S. labor market is Higher mortgage costs The current economic Broader supply chain The upcoming election
to continue interest rate hikes, the Fed’s policies heavily dependent on currently strong; and lower consumption, conditions may result in issues brought about by in early 2024 will impact
hikes to curb inflation in may not be effective in individual circumstances however, a weakening if combined with instability in part of the COVID-19-related policy decisions which
2023 despite fears of reducing inflation in the as well as expectations labor market and exacerbating factors financial market, delays and geopolitical subsequently feed
sparking a recession short-term due to increases in such as high resulting in significant events through to the economy
persistently high labor unemployment could unemployment, may downside (e.g.,
demand and other destabilize growth lead to a slowdown in derivatives or PE)
continued price further activity and housing
pressure market crash
Key • Higher interest rates • High inflation will • GDP is highly sensitive • If the slowing of the • With mortgage rates • While the financial • To the extent that • An election cycle and
will likely further slow continue to erode to consumer spending economy results in a rising, we anticipate a markets are, on the geopolitical issues potential subsequent
implications growth via increased consumers’ real significant uplift in slowdown in activity as whole, well regulated, persist or worsen (e.g. change of government
• Declines in consumer
borrowing costs disposable income, confidence can lead to unemployment, the individuals delay there is still a small deterioration of U.S.- midway through a
• Higher than leading to lower delays and reductions effects of the buying and selling; this risk that under adverse Chinese trade recession / recovery
anticipated interest consumption in purchases and have slowdown could be can have a significant conditions, significant relations and risks introducing
rate rises could tip the • In an extreme a significant impact on compounded by impact on GDP, with instability may arise escalation of the further instability
balance from slow scenario, this may lead outlook significant declines in real-estate-related • Depending on the size Russia-Ukraine
growth to decline to stagflation or result consumer spending activities contributing of the market that is conflict), supply chain
• Both real and to 15% of output constraints and
in a deeper recession perceived threats impacted, this could
as the Fed has to raise impact confidence, • In a worse case represent a large shortages may bring
interest rates further scenario, mortgage downside risk about higher input
and customers may costs and bolster
and more aggressively choose to reduce defaults may lead to a • A number of different
spend even if their housing crash, further markets have been inflation
personal exacerbating cited as potential risks,
circumstances are economic distress including
unaffected cryptocurrency, PE
and derivatives
Likelihood of
downside
Magnitude of
High Med High Med Med High High Low
downside
Source(s): Teneo Research & Analysis
13Overall Outlook
To understand how these factors will affect the overall outlook, we
outline four potential scenarios and consider how key macroeconomic
metrics would look in each scenario. Negative outlook Moderate outlook Positive outlook
Four most likely broad economic scenarios
Soft Landing Mild Recession Deep Recession Long-term Inflation
The Fed’s current policy is effective, The Fed decides that further interest Greater downside than forecast. Potentially Inflation remains high despite fiscal policy
inflation returns to pre-2022 levels, and rate rises and/or the Fed’s current policy driven by instability in the job or housing intervention from the Fed. The economy
consumer output increases as real wages results in more slowdown than market, leading to a reduction in consumer may not enter a recession; however, it
trend upwards. As a result, the U.S. does anticipated and the economy enters spending or geopolitical factors keeping could result in a prolonged period of slow
not enter a recession but experiences recession beginning in Q4 2022 and prices up. This would result in a steeper or declining growth (well into 2024) as
12-18 months of slow growth. lasts 3-4 quarters. decline in GDP and likely last 4+ quarters. wages fail to keep up with prices.
Inflation1 2-3% 2-3% 2-4% 4-5%
Interest rates2 2-4% 2-5% 2-5% 5-6%
GDP3 0-2% -1-0% -2-4% -1-1%
Duration n/a 2-4 quarters4 4+ quarters4 4+ quarters4
Overall outlook è/ì è/î î î
Source(s): Teneo Research & Analysis
Note: 1Levels of Inflation forecast for December 2023, 2Interest rate outlook as of December 2023, 3Annual GDP growth outlook for 2023, 4Following the commencement of the recession
14Outlook Across A small number of key economic
Key Economic
factors are likely to dictate the
overall outlook
MetricsOutlook Across Key Metrics
The speed and the extent to Consumer Price Index; forecast 2019-2024 Teneo Forecast Range
which inflation returns to pre-
Actual
2021 levels depend on a 10.0% Historic Forecast Forecast (OECD)
number of key factors. In all
9.0%
scenarios, we expect to see a
8.0%
material softening of inflation A long-term inflation scenario
in 2023, returning to target 7.0% could see inflation remaining Impact of long-term inflation
inflation levels of 2% by 2024 6.0% at c.4% well into 2024 (scenario 4)
in the case of a ‘soft landing.’ 5.0% Long term-inflation will mean that the Fed will
have to keep interest rates at current levels (or
4.0%
Integral to the economic outlook over For a soft landing to be potentially higher)
3.0% achieved, the US economy
the next 12-18 months is how quickly will need to see inflation fall This is likely to impact GDP as consumers reduce
inflation returns to pre-crisis levels. 2.0% significantly across 2023 spending, in response to prolonged real wage
Inflation will naturally fall across 2023 declines, and businesses reduce investment
1.0%
as prices are compared to the already
0.0% In this scenario, the U.S. is likely to see low or
high levels seen in 2022. Furthermore,
with the Fed raising interest rates 2019 2020 2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 declining growth for a prolonged period
earlier and more aggressively than 2022 2022 2022 2022 2023 2023 2023 2023 2024 2024
other geographies, it hopes to return to
the target levels of 2% by 2024. Source(s): BLS, Teneo upper and lower bound based on consolidation of forecasts (TD Economics, SPF, Deloitte, OECD, Bloomberg, CBO)
However, there are several headwinds
facing the U.S. that may result in Key drivers of go-forward inflation
medium to long-term inflation
remaining high, and it is not a given
that the U.S. will continue to see the
low levels it has seen historically.
Fed Response Geopolitical Issues Labor Supply Shortages
Raising interest rates increases the cost of Continued geopolitical turmoil in Europe, as well There are structural issues in the labor market,
borrowing, which in turn impacts demand, putting as COVID-19 outbreaks in China, could continue which have included inactivity and long-term
downward pressure on prices. to disrupt the supply chain and create excess sickness, which have resulted in skill shortages.
The Fed has been proactive in raising interest demand through shortages, driving prices While this lowers the risk of widespread
rates as a response to inflation, with this strategy upwards. unemployment being triggered by a downturn, it
expected to continue. has placed upward pressure on wages, which
may drive further inflation.
16Outlook Across Key Metrics
Interest rates are expected to Federal funds rate If inflation does not decline as expected, further Forecast Range
continue to rise through the rate hikes are likely. This would result in a more
Actual
first half of 2023 before 7% aggressive slowing of the economy and could
result in a deep recession scenario. Market Average Forecast
declining from 2024 onwards.
6%
While consensus appears to be that
the Fed is likely to begin lowering 5%
interest rates in the second half of
the year, there are a number of 4%
scenarios in which a significantly
different profile may be seen. 3%
A rapid decline in inflation, in case of a ‘soft landing,’ could see
If inflation turns out to be harder to the Fed dropping rates earlier than expected. Alternatively, the
2% Fed may choose to lower interest rates to encourage growth if
unwind than anticipated, the Fed may a significant slowdown begins to emerge, favoring a slower
choose more aggressive rises at the decline in inflation to protect the broader economy.
expense of growth. On the other 1%
hand, a faster easing of inflation or a
more significant slowdown arising 0%
from interest rate rises may result in 2021 2022 2023 2024
earlier lowering.
Source(s): Bloomberg, Federal Reserve, Teneo Research and Analysis
When could the Fed keep raising When could the Fed lower
interest rates? interest rates?
Inflation proves to be harder to Inflation returns to target quicker Instability in the labor or
unwind than expected than expected housing market
If inflation remains higher for longer than If inflation starts to show signs of falling in early If the housing market or labor market begins to
expected, the Fed may have to increase 2023, the Fed may choose to lower interest rates show significant signs of trouble, such as large
interest rates further so that long-term inflation earlier than expected. upticks in unemployment or significant declines in
expectations can be managed back to the house prices, the Fed may choose to lower rates
target level. earlier to encourage growth.
17Outlook Across Key Metrics
A soft landing or a mild CPI and wage growth Wage Growth Forecast
recession could mean real
Inflation Forecast Upper-Bound
wages start to increase by
10%
mid-2023. Historic Forecast
Inflation Forecast Central Case
Inflation Forecast Lower-Bound
How quickly real wages return to
9%
growth is critical for the economic
outlook and a key driver of
consumer spending. Individuals saw
8%
declines in real wages across 2022
and, as a result, have begun feeling
less well-off than they did 12 7% If long-term inflation occurs then real wages will
months ago. This is further continue to decline into the second half of 2023
exacerbated as savings and remain static into 2024.
accumulated during the pandemic 6%
are reduced. In a soft landing
scenario, real wages are expected
to grow again by early 2023. 5%
However, long-term inflation could
see real wages declining throughout
4% With CPI remaining higher than wage growth
2023 and then remaining static for a throughout 2022, consumers’ real wages
prolonged period. It is in this went into decline.
scenario that we would expect to 3%
see the greatest impact on
consumer spending.
2%
In a best-case scenario, wage growth continues
while inflation falls. Real wages could rise from
Q2 2023 and onwards, resulting in upticks in
1% consumer spending.
0%
2021
2021 Q1 2022 Q2 20222022Q3 2022 Q4 2022 Q1 2023 Q2 20232023Q3 2023 Q4 2023 Q1 2024 Q2 2024
Q1-Q2 2024
Source(s): BLS, Bloomberg, OECD, Atlanta Fed, PIIE, Teneo Research & Analysis
18Outlook Across Key Metrics
Over the past 12 months, Wage growth and the gap to inflation1 Wage Growth (%)
individuals across lower
Gap to Inflation (%)
income brackets have seen Inflation – 7.1%2
faster wage growth, reversing
historic trends. Average Income3
The impact of these declines is not
evenly distributed, with high-income
households being disproportionately
impacted by declines and, therefore, Fourth quartile 4.8% 2.3% $167k Those working in professional
more likely to see the largest drops in services / corporate jobs
consumption. experienced low wage growth in
comparison to inflation and
This is distinct from what is being
observed in other geographies, such therefore experienced the most
as the UK, where wage growth in substantial reduction in real
higher income groups has outpaced Third quartile 5.7% 1.4% $81k disposable incomes
lower income groups.
Second quartile 7.2% 0.1% $47k
Those in the workforce in the
lowest-paid income brackets have
seen wage growth exceed inflation
(albeit by a small amount)
$20k
First quartile 7.4% 0.3%
Source(s): BLS, Atlanta Fed, FRED,
Teneo Research & Analysis
Note: 1Covers 12 month moving average of
median wage growth and inflation by income
as of November 2022 2Inflation November 0% 1% 2% 3% 4% 5% 6% 7% 8%
2022 3Average income is after taxes and
includes all sources of income for 2021
19Outlook Across Key Metrics
Declines in real wages, Anticipated impact on consumption Negative outlook Moderate outlook Positive outlook
coupled with low consumer
confidence, are likely to
translate into a drop in Higher income groups are
Overall
consumption in the highest Income Wage Implied real Consumer Consumption likely to reduce consumption
Inflation1 proportion of
income groups. bracket increase1 wage growth confidence forecast Larger drops in consumption are
expenditure
expected in groups that have
Real wage declines in the top income experienced a real wage growth
brackets are resulting in drops in decline over the last 12 months.
consumer confidence as households
feel less well-off. Consumer Upper Since the highest income bracket
4.8% -2.3% 44% î ê
confidence is now at lower levels than quartile accounts for 44% of expenditure,
during the 2008 GFC and the COVID- even a small decline in real wages
19 pandemic. and confidence can have a
significant impact on overall outlook.
Going forward, this is expected to
have a knock-on impact on Third
consumption, with low confidence 5.7% -1.4% 25% î î Lower income groups are
quartile
resulting in households choosing to likely to maintain
preserve savings and reduce consumption to cover spend
consumption. Reduced consumption, 7.1% on essential goods
particularly in high-income groups who
make up a significant proportion of Since the lowest income quartiles
overall consumer spending, is likely to Second have had real wage growth, we do
have a significant impact on outlook
7.2% 0.1% 18% è èì not expect to see the same declines
quartile
in consumption.
and has the potential to tip the
economy into a recession. In the scenario of a ‘soft landing,’ it is
possible that consumption of
discretionary products may increase
if wage growth momentum continues
Lower
7.4% 0.3% 12% è èì and inflation falls within this group.
quartile
Source(s): BLS, Atlanta Fed, FRED, Teneo Research & Analysis
Note: 1Covers 12 month moving average of median wage growth and inflation by income as of November 2022
20Outlook Across Key Metrics
While the U.S. labor market Unemployment rate forecast1; Q3 2021-Q1 2024 Structural challenges facing
Forecast Range
seems healthy on the surface,
there are structural challenges Actual the U.S. labor market
6%
that have the potential to
create headwinds in the Even in worst-case recessionary scenarios, a Low participation rates
upcoming 12-18 months. significant rise in unemployment is not expected. Over the last 20 years, the labor force
This is distinct from the recession following the participation rates in the U.S. have been declining
The U.S. labor market, on the whole,
GFC, where unemployment rose sharply from from an all-time high of 67.3% in January 2000 to
appears strong. Low levels of 5% to 10% in the span of just two years. 62.1% in November 2022, resulting in
unemployment and high amounts of
labor shortages.
open positions mean that although
unemployment is likely to increase as
5% High levels of long-term sickness
a result of interest rate rises, the
general consensus is that this U.S. life expectancy has declined by 0.6 years in
softening in the labor market will be the period from 2010 to 2022; 78.8 in 2010 to
modest. Even in worst case or more 78.2 in 2022.
pessimistic forecasts, unemployment
In Europe, the increase over the same period has
is only set to rise to 5%, well below the
been 1.4 years to 82.1 in 2022.
levels seen during the GFC. However,
while unemployment may not rise Rising chronic health problems mean that
significantly, structural challenges in workers are less productive and absenteeism
the labor market, including low 4% increases, thus reducing economic output.
participation and high levels of long- In fact, the CDC estimates that six in ten adults in
term sickness, are creating supply the United States live with a chronic disease.
challenges that may put further
pressure on inflation.
If the Fed’s monetary response leads to a soft
Cultural shifts
landing which results in a cooling of the labor Following the pandemic, 38% of workers looking
market, this could lead to unemployment rates for a new job were doing so because of work-life
stabilizing as economic activities continue.
balance challenges.
3% Since certain job roles are limited by the type of
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 flexibility they can offer, certain sectors will likely
2021 2021 2022 2022 2022 2022 2023 2023 2023 2023 face labor shortages as workers transition to
Sources: United Nations, Prudential, alternative careers.
Statista, Teneo Research & Analysis Source(s): FRED, Teneo upper and lower bound based on consolidation of forecasts
Note: 1Not seasonally adjusted (Conference Board, TD Economics, Federal Reserve, SPF, Deloitte, OECD)
21Outlook Across Key Metrics
Supply-side shortages created How supply-side shortage can lead to a wage-price spiral
by structural challenges in the
labor market could lead to External factors
further wage pressure and Feedback Loop causing price rises
drive up inflation as a result.
Demographics
While low levels of unemployment
and high amounts of open positions
today generally point to a strong labor
market, this is a dynamic primarily COVID-19
Reduced Increase in Wage-price
driven by supply-side shortages Price rises
labor force wages spiral?
rather than strong growth in business Cultural shift
output. These supply-side shortages
are creating upwards pressure on
wages. While this wage growth has
helped individuals partially cover the
cost of rising inflation, it can also be a
driver of further inflation.
As the economy began to recover following the easing of Wages rose as a result, which meant that businesses had to If this feedback loop
lockdowns, businesses across the economy started hiring. counteract the increased input wage costs by increasing continues between wages
However, there were supply-side problems which meant that their prices… and prices, we could see
workers were unwilling or unable to return to work. …the Russia-Ukraine conflict and pent-up consumer a wage-price spiral,
For those that did start working, cultural shifts meant that demand from the pandemic compounded this effect by which may result in long-
willingness to work certain jobs was reduced. raising demand, thereby causing further inflationary pressure. term inflation.
Unfilled job vacancies Total unfilled job vacancies Source(s): FRED
There were 10.3 million unfilled
job vacancies across the U.S. 15M
economy in October 2022 10M
Prior to the pandemic, there were
7.4 million unfilled job vacancies 5M
in October 2019
201…
201…
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201…
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202…
202…
202…
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202…
202…
202…
202…
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0M
2018 2019 2020 2021 2022
22Outlook Across Key Metrics
Changes to interest rates, inflation and suppressed consumer demand will
have a direct impact on business output. Highly likely / high magnitude Likely / medium magnitude Unlikely / low magnitude
% of Sensitivities
Industry total U.S. Sensitivity to change Sensitivity to change Commentary
output Sensitivity to inflation Overall outlook
in interest rates in consumer spend
Increasing interest rates are likely to result in lesser borrowing and lower demand for real
Finance and real estate 20.2% High Medium Medium ê estate and mortgages
Industrials1 and Large-cap construction projects are likely to be delayed significantly due to higher
14.9% Medium Medium Low î borrowing costs; high materials costs are likely to dampen industrials
construction
Professional services are likely to remain resilient as they are less exposed to interest
Professional services 13.0% Low Low Low è rates and consumer spending, but may face increased labor costs via wage inflation
Retail and wholesale A decline is expected as consumers seek to reduce discretionary spending and retailers
12.1% Low Medium High ê face higher goods and labor costs
trade
Recession may increase need for social security and welfare payments, exacerbating
Government 11.6% High Medium Low î the existing budget deficit brought about by COVID-19 spending
Health spending is likely to remain resistant due to its non-cyclical nature; however, the
Education and healthcare 8.3% Medium Medium Low è strong dollar may deter foreign investment
Although not severely impacted by interest rates or consumer spending, customers may
IT and communications 5.4% Low Low Low è choose to delay upgrades or ‘trade-down’ for lower cost providers or services levels
Higher interest rates may impact debt repayments on capital expenditure, while inflation
Agriculture and mining 3.3% Medium Medium Low î is likely to drive up the cost of raw materials
Consumers will likely reduce non-essential travel, and airlines seek to recoup losses
Transport and storage 3.2% Medium Medium High î from COVID-19 travel bans
Despite being essential, overall spending is likely to decline where consumers choose to
Accommodation and food 3.1% Low Medium Low è/î trade down to cheaper alternatives
Energy and utilities 1.8% Medium Medium Low î Spend will likely increase as energy prices remain high
Arts, entertainment, and
1.0% Low Medium High ê Sector will likely decline as consumers reduce non-essential spending
recreation
Source(s): US Bureau of Economic Analysis, Teneo Research & Analysis Note: 1Includes manufacturing, and materials 23Sector-Specific We expect reductions in consumer
Outlooks
spending, rising cost of capital and
reduced investment to acutely
impact certain industriesSector-Specific Outlooks
Consumer- % change in average consumer expenditure towards each As consumption declines,
Facing expenditure category, 2007-2010, U.S. significant changes in spending
Industries
behaviors are expected
Any reductions in Education 14% Evidence from the 2008 GFC is informative
consumer spending Health care 11% regarding where consumers may cut back. For
are expected to acutely instance, between 2006 and 2010, U.S. consumers
impact discretionary Utilities, fuels, and public services 5% materially adjusted their proportional household
consumer-facing spend in order to prioritize certain goods and
Miscellaneous Consumers reduced 5%
services over others. However, today’s environment
spend on discretionary
industries, as is different in several ways.
Food at home items, with larger 5%
individuals re-prioritize purchases facing the
spending as household Personal insurance and pensions largest declines 1%
Greater competition for spend
income declines. Personal care products and services (1%) There are a number of goods which were
previously considered discretionary but
Housing (2%)
are now considered essential and
Housekeeping supplies (4%) therefore are fighting for a wallet share,
including broadband, mobile telephone
Food away from home (6%)
and streaming services.
Entertainment (7%)
Footwear (7%) Latent demand for unavailable
COVID-19 activities
Public and other transportation (8%) Spending on Consumers have been prevented from
essential items
Apparel and services (10%) travel and tourism activities. There is
remained robust as
consumers are evidence that consumers are looking to
Alcoholic beverages (10%) unable to make travel more and prioritize that spend. In
reductions in these 2022, 60% of travellers planned on
Household furnishings and equipment (18%) spending categories
Source(s): Labor Turnover visiting a new desitination1. This makes it
Survey (US Bureau of Labor Vehicle purchases (net outlay) (20%) likely that consumers trade down in other
Statistics); Morgan Stanley; CNN areas of expenditure categories.
Business, OAG, Teneo Research -25% -20% -15% -10% -5% 0% 5% 10% 15% 20%
& Analysis
Note: 1Results from a survey in
April and May 2022 via OAG’s
flight tracking app Source(s): Consumer Expenditure Survey (US Bureau of Labor Statistics)
25Sector-Specific Outlooks
Consumer- Indicative ‘trade-down’ behavior for major U.S. supermarkets Consumers may switch to
Facing cheaper alternatives due to
Industries
current economic conditions
Luxury1
Beyond a reduction Erewhon Market, Bristol Signs of ‘trade-down’ behavior are emerging, with a
Farms, Citarella Gourmet consumer survey from September 2022 indicating
in spending, that 70% of respondents indicated they were
Market
consumers are also Some customers trade trading down3.
more likely to ‘trade- down on their consumption
Decreasing real disposable income
down’ their current experience In the event of persistently high inflation and low
Premium growth, it is likely that consumers will continue to
spending for cheaper ‘trade-down’ throughout 2023 to offset reduced
Whole Foods, The Fresh Market,
alternatives. Sprouts Farmers Market, Trader Joe’s real incomes.
Retailers that can
Some customers reduce consumption For businesses to retain customers and protect
demonstrate value
against trade-down behavior, they need to be
for money are likely competing on the value for money they provide –
to win over trade- Hypermarkets offers and loyalty will become increasingly important.
down customers. Walmart Supercenters, Target, Kroger
In addition, unlike previous
Wholesale clubs
slowdowns, another emerging
Costco, BJ’s, Sam’s Club ‘trade-down’ market segment is
poised to see significant gains:
Resale market growth
Source(s): US Consumer Pulse
3 Discounters Increasingly environmentally aware
Survey (Morgan Stanley); Aldi, Lidl, Walmart Discount2, Dollar Tree consumers will look to save money by
2thredUP, Teneo Research & purchasing second-hand. The second-
Analysis hand fashion market is set to grow by
Note: 1Luxury segment tends to 26% across 20232.
trend more regional than
national, 2Corporate identifies Key discounters have reported greater-than-expected earnings as
discount stores separately to consumers aim to save money – Walmart reported 8.2% growth in Q3 2022
supercenters
26Sector-Specific Outlooks
Increasing mortgage rates are pricing consumers …resulting in large declines in home sales and
Real Estate out of the market... falling prices
8 2000 Existing home sales (LHS)
Est. total mortgage 1850
Interest rate rises Period Avg 30 yr mortgage rate Housing starts (RHS)
repayment, 30 years1 6 1700
have had a major
1550
impact on the Q4 2023 (forecast) 6.2% $811,800
housing market with 4 1400
mortgage rates 1250
$830,880
doubling in the last
Dec 2022 6.4%
(46% increase in repayments) 2 1100 -5.6%
12 months, resulting 950
in steep declines in Dec 2021 3.1% $566,640 0 800
activity and falls in 2020 2021 2022 …predicted fall in house
house prices. Source(s): Mortgage Bankers Association of America, Freddie Mac, Teneo Source(s): FRED Economic Data, US Census prices over 20232
Research & Analysis Bureau, Teneo Research & Analysis
Impact on demand and household income Impact on wider economy
Source(s): FRED Economic Reduction in Reduction in Cost of Decline in wealth/ Reduced Reduced
Data, Mortgage Bankers
Association of America, Freddie demand supply living Wealth effect borrowing construction activity
Mac, Teneo Research & Analysis As mortgage rates rise, As demand dries up, supply Any homeowners on As wealth declines in the Homeowners are less likely Declining house sales impact
Note: 1Calculated using the consumers are priced out of can also be affected, as variable mortgages will economy, consumers tend to undergo equity the wider contraction and real-
average mortgage value of a the market. Over 70% of the homeowners choose not to have to endure increased to tighten spending and withdrawals when the price estate industries. Fewer
house: $387,600 (Dec 2022) U.S. population cannot move until mortgage rates monthly repayments, increase savings, even more of their home is lower than house sales lead to lower
multiplied by the Avg. 30 year afford the median are more favorable and diverting spend from other so if there is widespread expectations. Subsequently, associated activity, such as
mortgage rate 2 Forecast from mortgage rate as it stands. house prices stronger. areas of the economy. negative equity. activity in financial markets home improvements.
Case-Shiller survey of 25 house
pricing strategists may fall.
27Sector-Specific Outlooks
Purchasing Managers Index (PMI) indicates the PMI underlying components
Industrials industry is in decline
Expanding Contracting
PMI is a leading indicator, calculated using survey responses from PMI components Dec Index Nov Index Ppt. Change Direction
Though initial warning purchasing managers in the U.S. economy, that gauges the outlook
signs are there, the for the manufacturing sector based on five key components (right). New orders 45.2 47.2 -2.0 î
industrial and
manufacturing sector Production 48.5 51.5 -3.0 î
PMI (Dec 2022) A score above 50 suggests
is likely to be more the industry is in expanding
48.4
Employment 51.4 48.4 +3.0 ì
insulated than other
industries due to pent- A score below 50 suggest Supplier deliveries 45.1 47.2 -2.1 î
Previously 49.0 the economy is contracting
up demand, offsetting
price pressure. Inventories 51.8 50.9 +0.9 ì
The latest readings suggest the industry is in decline
and will continue to decline Additional indicators Dec Index Nov Index Ppt. Change Direction
Pricing 39.4 43.0 -3.6 ê
• Overall sector outlook is neutral/negative for 2023, as
high order backlogs, easing supply chain pressures and Order backlog 41.4 40.0 +1.4 ì
margin tailwinds from recent price increases offset weaker
macroeconomic growth.
In the manufacturing sector, downward pressures are coming
• Pent-up demand has driven solid orders through Q3 from a lapse in new orders, production and supplier deliveries.
2022 for most issuers, which should support mid-single Additionally, inflation pressure is driving up costs, though this is
digit sector revenue in 2023. expected to lessen for 2023.
• Demand risks include China’s Zero Covid policy, the
Russia-Ukraine conflict and capital spending. That being said, employment is expanding, and though inventory
levels are unusually high, the risk of write-off is limited, largely due
to products waiting on components for completion and companies
holding higher a safety stock of key raw materials. Additionally, a
Sources: ISM PMI, Teneo backlog of orders is supporting growth.
Research & Analysis
28Sector-Specific Outlooks
Aerospace
Revenue passenger miles (number of miles travelled by paying Key features of the airline
and Aviation passengers) for domestic and international flights in the U.S., performance during recessions
Jan 2000-Sep 2022
Cyclicality with GDP Growth
Aerospace and Airline profit cycles closely follow that of the
100m economy, as aviation demand is primarily a
aviation are highly Dot-com crash, Global COVID-19 consumption-led phenomenon – in 2009, at the
cyclical businesses 9/11, SARS Financial pandemic
90m height of the GFC, air traffic dropped 6.1%.
and are heavily pandemic Crisis
connected to the state Lagged recoveries
of the economy. 80m Passenger numbers generally lag behind the
recovery in industrial output due to reliance on
employment and household incomes; this lag is
70m exacerbated further for ‘premium’ class travel as
opposed to ‘economy’ class.
60m
Freight often recovers before
passenger travel
50m As freight is linked inextricably to industrial
output, and is typically a preferred mode of
transport for shipping due to its low transit times,
40m it often recovers first – during the GFC, freight
The Global Financial Crisis began recovery four months before world trade
30m was the first time a recession and two months before industrial production.
on its own led to negative air
travel growth
20m
10m
Source(s): US Department of Aviation and aerospace
Transportation; (Franke and
John, 2011) What comes next 0m players should see the
after recession? – Airline industry 2000s 2010s 2020s looming recession as a
scenarios and potential end
games, Teneo Research & considerable headwind
Analysis Source(s): US Department of Transportation
29Sector-Specific Outlooks
Valuations are falling as interest rates are on …and there are a number of challenges faced
Private Equity the rise…. by the sector
S&P price to sales (LHS)
FED funds rate (RHS) Economic uncertainty
Private equity houses % Over the past five years, private debt funds have done exceedingly
P/S Ratio
well, with fundraising almost doubling. However, inflation and the
have become 5.0 3.5 rising cost of capital continue to alter deal values and influence the
accustomed to financial markets.
operating in low- 4.5
interest rate and low- Rising interest rates increasing cost of debt
inflationary 3.0 Historically PE firms have enjoyed low cost of debt due to low-interest
4.0 rates; as interest rates rise to curb inflation this poses higher risk to
environments. The
PE firms.
highly leveraged
nature of this 3.5
2.5 Decreasing capital calls
industry poses During the previous financial crisis, capital calls (collecting funds from
potential risks to the 3.0 limited partners) dropped substantially, though this is expected to be
sector going forward. less pronounced than the crisis of 2008/09 given the more
sustainable pace of contributions over the past decade.
2.5 2.0
Re-direction of investment
2.0 With the high-interest rate environment, investors may seek to re-
direct funds away from riskier investments and lock in a guaranteed
1.5 return. That being said, if the Federal Reserve starts a cycle of
1.5 interest rate cuts this may well see an uptick.
1.0 Dollar strength
1.0 Strength in the dollar typically leads to more outbound M&A and less
inbound M&A given relative prices, though this trend is known to
0.5 break during times of recession.
EBITDA multiples
0.0 0.5 Private equity has enjoyed significant value creation at the point of
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 sale through EBITDA multiple expansion; as multiple expansion
Source(s): S&P Capital IQ, slows, we expect the value created by PE firms to decline.
FRED Economic Data, Teneo Source(s): S&P Capital IQ, FRED Economic Data,
Research & Analysis Teneo Research & Analysis
30Sector-Specific Outlooks
FAANG stock performance versus S&P 500 (2022) Increasing interest rates will lead to a number of
Technology hurdles for the industry
S&P 500 Meta Platforms, Inc.
(^SPX) - Index Value (NasdaqGS:META) - Share Pricing
Limited access to cheap capital
Netflix, Inc. Apple Inc. Rising interest rates have discouraged investors from making risky
Amid increasing (NasdaqGS:NFLX) - Share Pricing (NasdaqGS:AAPL) - Share Pricing
moves. VC investment dropped ~34% QoQ in Q3 2022, the largest
interest rates, Amazon.com, Inc. Alphabet Inc. drop in a decade.
investors fail to see (NasdaqGS:AMZN) - Share Pricing (NasdaqGS:GOOGL) - Share Pricing
the value in
technology stocks CapIQ Revenue growth below expectations
as the path to Investment has been high in technology companies assuming
20 ambitious growth targets. These expectations have not been borne out.
growth is unclear.
FAANG stocks have dropped
on average by almost 30% YoY
Decline in ad spend
0 Tightening budgets have caused advertisers to pull back
on spend. For many tech firms like Meta, ad spend is the primary
revenue stream.
-20
Decline in consumer purchases
Consumers are putting off device purchases due to decline in
purchasing power. E-commerce sales are also expected to continue
to taper off into 2023.
-40
Continued pressure on labor market
90,000+ tech worker layoffs occurred as part of double-digit percent
-60 layoffs in 2022. This comes amidst a broader labor shortage affecting
up to two million manufacturing workers.
Continued strength of the dollar
-80
Q1 2022 Q2 2022 Q3 2022 Q4 2022 Tech sectors have more international revenue exposure than the rest
of the S&P 500 and are experiencing the dollar cutting into revenues
Source(s): Barron's, Garnter, Forbes, Reuters, CNBC, CBInsights, from abroad.
Deloitte, S&P Global, Teneo Research & Analysis
31Comparisons Compared to Europe, the
U.S.’s outlook has improved
in recent monthsComparisons
1970s stagflation Early 1980s Early 1990s Early 2000s dot- 2008 Global 2020 COVID-19 Today
Previous U.S.
recession recession com crash Financial Crisis recession
slowdowns and
recessions can inform Scale and Five consecutive Four consecutive Three consecutive No consecutive Four consecutive Three consecutive While there are
quarters of negative quarters of negative quarters of negative quarters of quarters of negative quarters of negative diverging views on the
the likely outlook of length
growth between Q2 growth between Q1 growth between Q1 negative growth, growth between Q4 growth between Q2 exact profile, market
the next 12-18 months. 1974 and Q2 1975, 1982 and Q4 1982, 1991 and Q3 1991, but seven 2008 and Q3 2009, 2020 and Q4 2020, consensus suggests
bottoming out at bottoming out at bottoming out at consecutive quarters bottoming out at bottoming out at slow growth and/or
-2.3% growth q-o-q -2.6% growth q-oq -0.9% growth q-o-q of declining growth -4.0% growth q-o-q -8.4% growth q-o-q declines lasting
from Q3 2000 to throughout 2023
Q4 2001
Causes External shocks via Contractionary Contractionary Contractionary Financial crisis via Government Contractionary
the 1973 oil crisis monetary policy to monetary policy to monetary policy to the U.S. housing policies to combat monetary policy to
and the fall of the reduce inflation reduce inflation reduce inflation market crash and the effects of the curb inflation caused
Bretton-Woods caused by external caused by external caused by a stock liquidity crisis, COVID-19 by rising energy
system, exacerbated shocks via the 1979 shocks via the 1990 market bubble which reduced pandemic, primarily prices and a strong
by policy energy crisis and the oil price shock and which precipitated consumption and lockdowns and labor market
intervention to curb Iranian Revolution internal shocks via lower consumer and investment activity social distancing
inflation the Tax Reform Act business confidence substantially
Comparisons to 2023
The Federal Reserve needs to A soft landing scenario most A deep recession/long-term
balance boosting economic closely mimicking the dotcom inflation scenario may be closer
activity while maintaining crash, defined by a prolonged to the stagflation of the 1970s
inflation, which limits the extent period of slow growth
to which expansionary monetary
policy can be leveraged and Businesses should seek to
may result in a prolonged period prepare for a prolonged high
of challenge interest rate environment,
Source(s): Teneo Research & Analysis unlike previous recessions
33Comparisons
Previous U.S. Real GDP growth in the U.S., indexed to one quarter before the start of the
slowdowns and
recessions can inform recession caused by these events (re-based to 100)
the likely outlook of
the next 12-18 months. 115
2000s Dot-com crash
Real GDP forecast upper-bound
110 1990s
1980s (first recession)
COVID-19
105
1980s (second recession)
100
1970s stagflation
95
Real GDP forecast lower-bound
2008 Global Financial
Crisis
90
Quarters
85
1 2 3 4 5 6 7 8
Source(s): Teneo Research & Analysis
34Comparisons
Compared to Europe, GDP annual growth forecast for 2023 of selected Inflation impact on % of consumer baskets
the outlook for the
U.S.’s GDP growth in countries, revised over the course of 2022 around the globe (OECD)
2023 has improved in Source(s): OECD 4%
recent months due to 4%
stronger economic World 6% 9%
performance.
3% Europe
For the majority of 2022, 32%
U.S. 33%
U.S. growth in 2023 was 61%
2% 62%
forecasted to be lower than UK
that in Europe. This trend
has reversed since Q4
2022. The U.S. is now 1%
expected to perform better United States Euro Area
than Europe throughout
2023 for several key 0%
12% 7%
reasons: Jan-22 Jun-22 Nov-22
26% 13%
• U.S. response to inflation -1%
in 2022 was rapid – the
Fed raised interest rates Source(s): Consensus Economics, Teneo Research and Analysis)
before other major 80%
62%
economies.
Factors contributing to improvements in the U.S.’s
• European dependence economic forecasts Japan UK
on energy from Russia
meant that the 2023 Country Current Interest Rate Nov-22 Inflation Rate
outlook for real GDP in
Europe has been further United States 4.5% 7.1%
revised downwards as
the conflict continues. Euro Area 2.5% 10.1%
Raising interest Strong performance Less exposure to
rates early in 2022 in the labor market cheap energy from Japan -0.1% 3.8%
when inflation throughout 2022 Russia in comparison
UK 3.5% 9.3%
initially appeared to European countries
35U.S. Economic Outlook 2023 Authors Gee Lefevre Jess Egan Adam Hobbs Senior Managing Director Associate Director Senior Consultant Management Consulting, Management Consulting Management Consulting Global Lead of the Travel, Leisure and Hospitality Practice
About Teneo The Global CEO Advisory Firm Teneo is the global CEO advisory firm. We partner with our clients globally to do great things for a better future. Drawing upon our global team and expansive network of senior advisors, we provide advisory services across our five business segments on a stand-alone or fully integrated basis to help our clients solve complex business challenges. Our clients include a significant number of the Fortune 100 and FTSE 100, as well as other corporations, financial institutions and organizations. Our full range of advisory services includes strategic communications, investor relations, financial transactions and restructuring, management consulting, physical and cyber risk, organizational design, board and executive search, geopolitics and government affairs, corporate governance, ESG and DE&I. The firm has more than 1,600 employees located in 42 offices around the world. © 2023 Teneo. All rights reserved. This material was produced by Teneo for use solely by the recipient. This communication is intended as general background research and is not intended to constitute advice on any particular commercial investment or trade matter or issue and should not be relied upon for such purposes. The views expressed here represent opinions as of this date and are subject to change without notice. The information has been obtained from sources believed to be reliable but no guarantees can be given as to its accuracy, completeness or reliability. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic or otherwise, without the prior consent of Teneo. Teneo refers to Teneo Holdings LLC and its affiliates.
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