Economic Imbalances Could Mean Deep Recession or Sticky Inflation


A member of Putnam's Fixed Income team since 2007, Onsel Gulbiten analyzes macroeconomic issues, including inflation, interest rates, and policy developments.

With a recession in the next 12 months likely, we consider how deep a downturn could be, as its severity could result in different policy responses.

  • A mild recession does not necessarily mean a mild contraction in financial markets.
  • The current imbalance between capital markets and the real economy is large enough to increase the odds that a recession could come with a large drop in financial markets.
  • Imbalances could be corrected through a recession or persistent inflation over many years, or some combination of the two.