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Economic Overview – January 2023

Written by First Affirmative

Economic Commentary

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  • If the US economy slips into recession, it is likely to be shallow (Figure 1). Consensus forecasts point toward an economic slowdown/downturn in 2023, with the beginnings of recovery in 2024 (Figures 7 and 8). 
  • GDP growth was just below its 2% trend level in 2022 and will fall below that level in 2023, particularly if the US enters a recession (Figure 2). 
  • Inflation has fallen although it remains well above its 50-year average (Figure 3). 
  • Housing prices remain extremely high (Figure 4). 
  • Wage growth is moderating as the unemployment rate levels off (Figure 5). 
  • Labor demand is down – albeit still high (Figure 6). 

Figure 1. National Bureau of Economic Research – Six Determinates of Recession, 2019-2022