Moody’s Analytics chief economist Mark Zandi outlook for the year ahead is dour.
Forecasts US GDP at just 1% or less y/y in all four quarters of the coming year. Says the US economy will be supported by the strong U.S. labor market and consumer. Thus a recession will be avoided:
- “There is no doubt the economy will struggle in the coming year as the Fed works to rein in the high inflation, but the baseline outlook holds that the Fed will be able to accomplish this without precipitating a recession”
- warns of falling asset and home prices
- expects economic growth to bottom at 0.8% in Q3 2023
- GDP growth will then not exceed 2% until Q3 2024
- says it'll be a "slowcession"
On the Federal Open Market Committee (FOMC):
- Fed’s monetary policy has “nearly caught up with current economic and financial market conditions"
- "the funds rate should be close to 5%, consistent with investors’ current expectations of the terminal funds rate”
Fed funds and recessions:
Graph via St. Louis Federal Reserve branch.
