In the U.S., after two consecutive quarters of negative gross domestic product (GDP) growth followed by a third quarter of modest economic growth, overall growth for all of 2022 is expected to be positive over the course of the full year—the consensus estimate is 1.5%–2%.
Source: The Richmond Fed “National Economic Indicators,” as of 11/14/22. Note: Projection is the median, central tendency and range from the March 2022 Summary of Economic Projections. Teal dots indicate median projections. Projections of change in real gross domestic product (GDP) are from the fourth quarter of the previous year to the fourth quarter of the year indicated.
Expectations for 2023 are less sanguine. According to the Wall Street Journal Economic Forecasting Survey (as of October 16, 2022—the most recent release), there is a rising consensus opinion that the U.S. will fall into recession within the next 12 months.
Source: Wall Street Journal surveys of economists as of November 2022. Note: Gaps indicate question not asked or data unavailable. There is no guarantee that any projection, forecast or opinion will be realized. Actual results may vary.
This translates to a consensus estimate for 2023 GDP growth of only 0.4%.
Source: Wall Street Journal surveys of economists, as of November 2022. Note: Change from fourth quarter to fourth quarter. There is no guarantee that any projection, forecast or opinion will be realized. Actual results may vary.
Likewise, outside the U.S., the Russian invasion of Ukraine, the stagnating economy in China and a European recession brought down global growth expectations for 2023.
Source: International Monetary Fund Global GDP forecast, as of October 2022. There is no guarantee that any projection, forecast or opinion will be realized. Actual results may vary.
Small business owners and consumers represent the bulk of economic activity in the U.S., and we see a distinct downward trend in both groups, driven by fears over inflation, rising interest rates and a potential recession in 2023. These trends may prove to be dominating factors in overall economic activity as consumers, business owners and investors take a “seek shelter” approach in their behavior.
Source: VettaFi Advisor Perspectives, data through October 2022.
At the same time, retail consumption generally remains positive. However, households could face mounting challenges in 2023, which could lead to more cautious behavior next year.
Source: St. Louis Fed (FRED), data through September 2022.
Finally, let’s look at the U.S. employment situation. The “headline” U-3 unemployment rate suggests we remain in a tight labor market, and even the less-followed “U-6” partial employment level (workers who are involuntarily working at less than full employment) suggests the continuation of a positive employment market. In addition, weekly jobless claims (one of the leading economic indicators) remain at historically low levels.
Source: St. Louis Fed (FRED), data through October 2022.
At the same time, while there appear to be plenty of jobs available, the relative “flat-lining” of both the “hires” and “quits” rates suggest a potential cooling—trends we expect to continue as we head through 2023.
Source: St. Louis Fed (FRED), data through September 2022.
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Unless otherwise stated, all data as of November 2022.
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