In this month’s Real Economy, RSM offers its annual economic forecast for the coming year and helps middle market businesses understand the changing economic landscape.

RSM Chief Economist Joseph Brusuelas says there is a 65% probability of a recession next year, most likely in the second half. But with businesses continuing to face a chronic shortage of labor, the unemployment rate will not reach as high as in past recessions, and that will help blunt the impact of the downturn.

How long will inflation last? The answer to that can be found in the housing market, where rising costs and prices are proving to be persistent, write Brusuelas and RSM U.S. economist Tuan Nguyen.

All of this is happening at a time of profound change in the global economy, Brusuelas writes. The hyper-globalization that has dominated the global economy over the past 30 years is giving way to an era of regionalization that is radically altering the flow of trade, investment and technology. For the middle market, that means a new era of higher costs and insufficient aggregate supply.

Finally, Brusuelas urges policymakers and middle market businesses not to lose sight of the importance of making productivity-enhancing investments that will pay off down the road. 

We look at these issues and more in the December issue of The Real Economy.