Will inflation be tamed in 2023? Can the Federal Reserve engineer a “soft landing” for the economy? What’s in store for the value of the dollar? Will the world’s economy grow? Right now, there are more questions than answers regarding the U.S. and global economies. An economic slowdown in China, the struggle in the European Union with high energy costs, the ongoing war in Ukraine, and struggles with declining currencies point to slower to moderate growth globally. The World Bank expects the global economy to increase 1.7 percent in 2023, about half the pace forecast in June.
Many economists expect the U.S. economy to enter a recession, albeit mild. The latest inflation figures show it is slowing but still remains well above levels seen in recent decades. Unemployment remains at historical lows and the number of job openings outweigh the number of unemployed people. Tidbits is a bit more positive regarding the U.S. economy. Reduced housing costs, improved supply chains, and lower energy costs will hopefully further restrain inflation. Employment numbers continue to grow, industrial production is rising, and consumer spending is steady to higher—not what one would expect if the economy were heading towards a recession. While the Federal Reserve will continue to raise interest rates in 2023, the rate increases should slow, hopefully steadying the overall economy.