04 Apr 2023 1 min read

Chart of the month: Credit tightening implies weaker US GDP growth

By Ben Bennett

The link between credit conditions and GDP growth adds conviction to our view that a US recession is likely this year.


The US Federal Reserve’s latest survey of senior loan officers in the US found a majority reporting that their banks were set to tighten credit conditions. And this was before the recent bout of banking stress – chances are that credit conditions will have tightened more since then.

Given over the last thirty years the chart suggests a potential link with GDP growth, this adds to our confidence over a recession in the US this year. We don’t think equity market valuations reflect this, and we therefore see further downside risk from here.

Ben Bennett

Head of Investment Strategy, Asia

Ben focuses on investment ideas and themes. He spends a lot of time on the 4Ds of fixed income investing: debt, deficits, demographics and deflation. This might be more than a little influenced by his first-hand experience of a credit crisis, having joined us from Lehman Brothers in 2008.

Ben Bennett