Research

Over the past several weeks, there has been considerable discussion of a “reacceleration” of U.S. economic growth in early 2023. While many have made note of this, few have been able to satisfactorily explain it, particularly given that it comes after the FOMC aggressively raised the Fed funds rate in 2022 and market interest rates followed suit.

It’s hard to know where you’re going if you’re not sure where you are. That is something we learned from experience in the dark days before the advent of GPS technology.

As far as 2023 outlooks go, that’s about as clear and concise, not to mention precise, as we can be. Consider it the triumph of experience over hope.

If we had to pick one dominant theme in discussions of the U.S. economy in 2022, that theme would be recession. Contractions in real GDP in each of the first two quarters of 2022 triggered intense debate as to whether or not the U.S. economy was already in recession.

Recall that when the BEA reported that real GDP had contracted in each of the first two quarters of 2022, our reaction was that underlying economic conditions were better than implied by the headline GDP numbers.

As we noted last month, even in the most normal of times, the economic data can send often conflicting and confusing signals on the state of the economy.

“Things are not always as they seem; the first appearance deceives many.” OK, so maybe Phaedrus wasn’t ruminating on the nature of economic data, but it fits, nonetheless. Even in the most normal of times, the economic data can send often conflicting and confusing signals on the state of the economy.