Economic Overview and Forecast for 2023 Q1

May 24, 2023

In the first quarter of 2023, the U.S. economy grew more slowly but spending remained strong, as did the job market, with unemployment equal to its pre-pandemic low. Inflation waned a bit further, mainly due to falling energy prices. Crude oil prices dropped to a 15-month low in the wake of multiple bank insolvencies in March; prices largely recovered as banking relief came swiftly. The banking crisis also briefly rocked stock and bond markets, but calmer conditions prevailed with the arrival of reassuring inflation data. The housing market continued to slow from its blazing pace of recent years as demand and price growth were hampered by high interest rates.

With anti-inflationary policy holding interest rates at a nearly 17-year high, the Federal Reserve finally softened its hawkish stance in the wake of March’s banking crisis. The Fed indicated that while further tightening may be deemed necessary, it would depend on careful monitoring of economic conditions.

As predictions of slower growth begin to come to fruition, many forecasters expect a recession, although the timing remains uncertain. FOMC members lowered projections of economic growth to 0.4% in 2023.

Honkamp Shareholder Rob Leibfried shares the Q1 economic highlights. View the full overview here: 2023 Quarter 1 Economic Overview and Forecast.