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Slowing global growth and market volatility have investors monitoring the horizon for a potential recession. However, the expansion could last for several more quarters, says a report from Desjardins that provides an economic analysis to support its position.

For example, despite a slower pace, growth for several countries remains above its long-term potential—a sign that mitigates recessionary concerns. “Among other things, the unemployment rate should not increase as long as economic growth does not fall below its potential,” the report says.

That’s important, since a persistent hit to the labour market shakes consumer confidence and can lead to a recession, says a TD report published this month. “Once the consumer goes to sleep, the expansion is over,” it says.

We’re not there yet. Real GDP must contract for at least two consecutive quarters to constitute a recession—not simply slow down, as is currently the case.

Other factors beyond real GDP used to identify a recession (depending on the country) are also holding up, Desjardins says. For example, in the U.S., employment, industrial production, business sales and personal income less transfer payments show no reversal in the current cycle.

There are, however, some caveats to this analysis. For example, leading economic indicators, as opposed to those tracking the current cycle, show few signs of improvement in growth over the next few months.

“At best, we might see the situation stabilize in emerging countries,” the Desjardins report says, referring to OECD leading indicators. “For the United States, the euro zone and a number of other economies, the situation might still deteriorate.”

Risks, including protectionism and political uncertainty, add to the potential for deterioration. These make investors more cautious, negatively affecting growth.

Still, investor sentiment rebounded this month, in part because federal banks sounded more dovish. “By slowing the pace of its monetary tightening, the Fed should leave more breathing room for an economy that seems to need to catch its breath,” Desjardins says.

Finally, it notes that the current cycle has some unique characteristics that might support a continued expansion. For example, its recovery phase took longer to take root relative to other cycles, at two years.

Also relatively long was the time for excess production capacity to be used—that’s when real GDP outstrips potential output. “Once potential GDP is surpassed, the economic cycle can be said to be maturing,” the report says. “This period lasts approximately three years on average.”

Since real GDP in the U.S. passed its potential in spring 2018, the current cycle could run until early 2021.

The bottom line is that it’s too early to call for a recession, at least with a high degree of certainty, says the Desjardins report. Still, caution is warranted as the cycle winds down.

For more details, read the full reports from Desjardins and TD.