'The recession isn’t here yet, but it's coming in 2023'

“An 18-month monetary transmission horizon doesn’t mean that rate hikes have no effect for the first 17 months,” he added. “Instead, there is an immediate, even anticipatory, effect given that rate hikes are usually anticipated by the bond market. It’s only the last vestiges of drag that arrive 18 months later.”

While this has probably been the most anticipated recession in history, Lascelles said that, despite the rising interest costs in 2022, consumer delinquencies are still declining. Household and businesses are also relying on higher savings accumulated during the pandemic. But, there are still a lot of headwinds with interest rate hikes, high inflation, high gas prices, Russian sanctions, a stumbling Chinese economy, and tight financial conditions already impacting the economy.

“Our business cycle work argues that a recession is near,” said Lascelles, warning advisors what to brace for as the recession keeps approaching.