The strategist who called a recession after the regional banking crisis says it already happened and nobody noticed

When Silicon Valley Bank went bankrupt in March, Dhaval Joshi, BCA Research’s chief strategist, told the Guardian it “presages an economic recession that is more imminent than many people anticipate.”

His prediction was one of many at the time, as experts hotly debated when a U.S. recession might start, how bad it could be, and even whether it would happen at all. (In fact, it was probably the most widely predicted recession ever.) At first glance, it appears that Joshi’s prediction didn’t quite pan out. Roughly five months later, the U.S. economy is plugging along with inflation subsiding and unemployment remaining near lows it last enjoyed in the 1960s—while GDP growth for the first quarter was even revised upward.

But Joshi says he didn’t mean just an American recession.

“The heated debate about a U.S. recession is a moot point. The much bigger story is that a typical world recession has likely already started,” Joshi writes in a BCA Research report. In fact, Joshi told Fortune on Thursday, that recession is here, “absolutely.”

Joshi says the global economy is in a recession now because the global GDP growth rate is at 1.2%, according to data from the Oxford Economics nowcast. Anything less than 2% growth, Joshi told Fortune, is enough to qualify as a global recession even without an outright decline. His rationale is that the average growth rate for the global economy hovers around 2% so anything below that number means the world economy is performing below average. In fact, the world economy almost never goes into a full-fledged decline, he noted to Fortune, having only happened three times in the last hundred years: during the Great Depression, the Great Recession, and most recently with the COVID-19 pandemic.

Data from some of the world’s major economies appears to back up Joshi’s thesis. France’s GDP growth was 0.7% this year and South Korea’s was 1.5%, according to data from the International Monetary Fund. Meanwhile, the U.S., which is the world’s largest economy and has led the developed world’s economic post-pandemic recovery, with 5.4% GDP growth compared to the end of 2019, may be an outlier. Especially considering advanced economies are growing at an overall rate of 1.3% this year, per the same IMF data.  

The business think tank The Conference Board acknowledges that domestic and global recessions may not always coincide because individual countries may experience different economic outcomes than the world as a whole. 

One of the main causes for concern, according to Joshi, is the rising unemployment rate around the world. He cites China’s 20% unemployment rate for young people between the ages of 16 to 24 as evidence of a lagging economic opportunity worldwide—A problem that’s also plaguing the European Union where youth unemployment was 13.9% in May. Again, the U.S. is an outlier here with its unemployment rate of 3.5%. (The U.S. releases unemployment rates for people between 16 to 24 years old in August, to account for seasonal work). Youth unemployment is often considered to be an indicator of future social mobility and consumer spending because when more people move into the workforce, it increases disposable income. 

Another major metric of global economic strength Joshi points to is the J.P. Morgan global manufacturing PMI, which measures global manufacturing output and fell to 48.8 last month, the lowest number in six months. The main driver of the continued decline in global manufacturing was fewer new order intakes, meaning that demand for new goods was weak worldwide. A pattern that has continued for 12 consecutive months, according to data from S&P Global. 

Despite strong stock market performance, particularly with the S&P 500 being on a six-month hot streak, other sectors of the global economy mirror the concerning results from the manufacturing industry, Joshi says. Brent crude oil prices are down to $79.54 a barrel this year, from $100.94 in 2022, according to the U.S. Energy Information Association. Chemical companies have lagged the aforementioned 16% growth from the S&P 500. In fact, Fidelity’s index fund that tracks chemical companies performed at -8.64% over the last six months. 

Joshi went on to say that the Federal Reserve and the central banks across Europe will exacerbate the problem as they tighten policies. Even though the Fed opted against another interest rate hike in June, meeting minutes released Wednesday show the idea was debated among officials, giving credence to Joshi’s point that more actions could be on the horizon.