After a year of economic turbulence, the American economy sailed into 2023 with positive energy and signs of growth despite inflation, exorbitant interest rates, and mounting worries of an impending recession. According to a FactSet survey, it is estimated that gross domestic product (the most inclusive measure for determining economic output) grew 2.3% annually from October-December – providing hope for what the future holds economically!
The Impact of Last Year on the Economy was Heavy!
Despite an expected second consecutive quarter of growth, the American economy is forecasted to decelerate and eventually slide into a recession in the upcoming months. This result stems from high-interest rates imposed by the Federal Reserve, which has caused borrowing costs for consumers, businesses, and corporations alike, including mortgages, auto loans, and credit cards, to be more costly than usual.
The housing market, highly sensitive to higher loan rates, has been adversely affected: Sales of existing homes have fallen for 11 months consecutively. From July through September, investment in housing was down a staggering 27% each year. Additionally, consumer spending, which accounts for around 70% of the entire American economy, is expected to soften alongside an otherwise strong job market in the coming months.
Despite This, Analysts Are Hopeful For The American Economy.
Undoubtedly, the American economy is off to a stronger start than it was in 2022. During the earlier part of last year, economic growth had decreased by an annual rate of 1.6% from January until March and even further with 0.6% between April and June. The two consecutive quarters saw worryingly low output that could have signified a recession starting up again.
Despite a shaky beginning to the year, the economy was able to recover over the summer due to robust consumer spending and an upsurge in exports. To everyone’s surprise, it grew at a noteworthy rate of 3.2% from July through September. This indicates that the American economy is likely to experience a stronger rise in the coming days of 2023.
