Are we at the start of a new business cycle?

Everything has been somewhat upside down in recent years, leaving many economists befuddled

article-image

Andy.LIU/Shutterstock modified by Blockworks

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


Ever since COVID closed global economies in 2020, gauging where we stand in the business cycle has been a very difficult act. 

The typical business cycle looks as follows, and historically, it’s been fairly easy to have a general idea of where we stood by contrasting it with interest rates and monetary policy:

However, everything has been somewhat upside down in recent years, leaving many economists befuddled. 

For example, in 2022 we saw negative real GDP prints (initially at two but then revised down to one):

However, during that same time we saw one of the hottest labor markets we’ve ever seen, as per JOLTS data. 

It’s hard to believe in a recession with a labor market that strong:

Since 2022, we’ve seen a major rate hiking cycle from the Fed that somehow also didn’t tilt the economy into a recession when looking at it on an aggregate basis. Stocks hit new highs everyday, the labor market cooled but remained resilient, and GDP growth powered ahead.

During that same time, however, if you honed in on the manufacturing and goods sector and set aside the services economy, it almost looks like we’ve just been through a manufacturing recession. 

ISM Manufacturing PMIs have been in contraction territory for a couple years now:

During that time, we saw significant disinflation leading to outright deflation in the goods sector of the economy:

Source: inflationguy.blog 

Fast forward to today, and we’ve seen the Fed cut rates to frontrun concerns about the labor market and continue attempting a soft landing of the economy where we move into a new business cycle without a recession.

We’re now seeing leading indicators hinting that the manufacturing sector might be exiting the doldrums and heading toward a new upswing.

We’re starting to see commodities begin to break out after two years of consolidation, hinting at an upswing in economic growth:

ISM new orders look to be breaking out, as well as the Philly Fed manufacturing index:

Per the survey data, it’s looking like much of this is being led by optimism from the business sector ever since the election:

So where does this chart-geeking journey lead us? 

I think it’s safe to say we’re not late in the cycle. It increasingly looks like we are in fact in the early innings of a new business cycle that avoided a recession due to the huge fiscal stimulus and deficits during the last couple of years.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

Chainalysis, Kraken, Fireblocks and Gemini are on the list, but we might not see a redo of Circle’s success

article-image

The startup should try to “redefine how crypto and media interact,” Mert Mumtaz said

article-image

President Trump’s feud with Elon Musk took a backseat as investors digested a better-than-expected labor report

article-image

The event, cohosted with FWB, helps devs accelerate their World mini apps and find funding along the way

article-image

Real-time slashing, isolated vaults and a yield tug-of-war between sGHO and stkGHO

Gemini announced its intentions to go public just a day after Circle’s IPO