S&P Global Ratings' U. S. economic forecast overview 2019 2020 2021 2022 2023f 2024f 2025f 2026f Key indicator Real GDP [annual average % change] 2. 3 [2. 8] 5. 9 2. 1 1. 7 1. 3 1. 5 1. 8 Real consumer spending [annual average % change] 2. 0 [3. 0] 8. 3 2. 8 2. 0 1. 2 1. 4 2. 1 Real equipment investment [annual average % change] 1. 3 [10. 5] 10. 3 4. 3 [0. 7] 1. 4 2. 0 2. 7 Real nonresidential structures investment [annual average % change] 2. 3 [10. 1] [6. 4] [6. 5] 8. 0 0. 2 [0. 3] 1. 1 Real residential investment [annual average % change] [1. 0] 7. 2 10. 7 [10. 5] [11. 5] 1. 1 4. 4 1. 8 Core CPI [annual average % change] 2. 2 1. 7 3. 6 6. 2 5. 0 3. 3 2. 4 2. 2 Unemployment rate [%] 3. 7 8. 1 5. 4 3. 6 3. 5 4. 0 4. 5 4. 6 Housing starts [annual total in mil. ] 1. 3 1. 4 1. 6 1. 6 1. 4 1. 3 1. 4 1. 4 Light-vehicle sales [annual total in mil. ] 17. 0 14. 5 15. 0 13. 8 15. 1 15. 1 15. 9 16. 0 10-year Treasury [%] 2. 1 0. 9 1. 4 3. 0 3. 7 3. 6 3. 4 3. 3 As of June 15, 2023. All percentages are annual averages, unless otherwise noted. Core CPI is consumer price index excluding energy and food components. f--forecast. Sources. Bureau of Economic Analysis, Bureau of Labor Statistics, The Federal Reserve, Oxford Economics, S&P Global Economics' forecasts. S&P Global Ratings' U. S. economic outlook [baseline] % change Quarterly average Annual average 2023Q1 2023Q2 2023Q3 2023Q4 2024Q1 2019 2020 2021 2022 2023f 2024f 2025f 2026f Real GDP 1. 3 1. 8 0. 9 0. 9 1. 3 2. 3 [2. 8] 5. 9 2. 1 1. 7 1. 3 1. 5 1. 8 GDP components [in real terms] Domestic demand 0. 8 2. 3 0. 5 0. 7 1. 1 2. 3 [2. 6] 7. 0 2. 4 1. 2 1. 1 1. 4 1. 8 Consumer spending 3. 8 1. 3 0. 6 1. 2 1. 2 2. 0 [3. 0] 8. 3 2. 8 2. 0 1. 2 1. 4 2. 1 Equipment investment [7. 0] 2. 0 0. 7 1. 0 1. 5 1. 3 [10. 5] 10. 3 4. 3 [0. 7] 1. 4 2. 0 2. 7 Intellectual property investment 5. 1 3. 0 0. 0 0. 0 0. 1 7. 3 4. 8 9. 7 8. 8 4. 3 0. 2 [0. 4] [0. 2] Nonresidential construction 11. 0 19. 2 3. 1 [1. 0] [1. 8] 2. 3 [10. 1] [6. 4] [6. 5] 8. 0 0. 2 [0. 3] 1. 1 Residential construction [5. 5] [2. 0] 1. 3 0. 6 [0. 1] [1. 0] 7. 2 10. 7 [10. 5] [11. 5] 1. 1 4. 4 1. 8 Federal govt. purchases 7. 5 [0. 4] 2. 2 [0. 1] 0. 4 3. 9 6. 2 2. 3 [2. 5] 3. 4 0. 6 0. 6 0. 4 State and local govt. purchases 3. 8 2. 6 2. 2 0. 9 0. 9 3. 0 0. 4 [0. 5] 0. 7 2. 7 1. 1 0. 8 0. 8 Exports of goods and services 5. 2 [1. 9] 5. 5 4. 7 4. 7 0. 5 [13. 3] 6. 0 7. 1 3. 7 4. 3 4. 6 4. 1 Imports of goods and services 4. 0 3. 5 2. 0 2. 0 2. 7 1. 2 [9. 0] 14. 1 8. 1 0. 2 2. 7 3. 3 3. 2 CPI 5. 8 4. 2 3. 8 3. 5 3. 1 1. 8 1. 3 4. 7 8. 0 4. 3 2. 7 2. 3 2. 1 Core CPI 5. 6 5. 3 4. 8 4. 4 4. 0 2. 2 1. 7 3. 6 6. 2 5. 0 3. 3 2. 4 2. 2 Labor productivity [1. 2] [0. 4] [0. 3] 0. 8 1. 3 0. 9 3. 3 2. 9 [2. 1] [0. 6] 1. 1 1. 6 1. 6 [Levels] Unemployment rate [%] 3. 5 3. 5 3. 5 3. 6 3. 8 3. 7 8. 1 5. 4 3. 6 3. 5 4. 0 4. 5 4. 6 Payroll employment [mil. ] 155. 3 156. 1 156. 6 156. 6 156. 6 150. 9 142. 2 146. 3 152. 6 156. 1 156. 5 156. 3 156. 7 Federal funds rate [%] 4. 5 5. 0 5. 4 5. 4 5. 4 2. 2 0. 4 0. 1 1. 7 5. 1 5. 2 3. 6 2. 7 10-year Treasury note yield [%] 3. 7 3. 7 3. 8 3. 7 3. 6 2. 1 0. 9 1. 4 3. 0 3. 7 3. 6 3. 4 3. 3 Mortgage rate [30-year conventional, %] 6. 4 6. 4 6. 4 6. 2 6. 0 4. 1 3. 2 3. 0 5. 4 6. 3 5. 8 5. 2 4. 9 Three-month Treasury bill rate [%] 4. 6 5. 2 5. 3 5. 3 5. 2 2. 1 0. 4 0. 0 2. 0 5. 1 4. 6 3. 4 2. 7 S&P 500 Index 4,112. 5 4,338. 3 4,297. 7 4,288. 8 4,294. 7 3,230. 8 3,756. 1 4,766. 2 3,842. 7 4,288. 8 4,295. 4 4,382. 8 4,561. 5 S&P 500 operating earnings [bil. $] 1,753. 5 1,742. 0 1,753. 5 1,736. 3 1,748. 6 1,304. 8 1,019. 0 1,762. 8 1,657. 9 1,746. 3 1,736. 3 1,749. 3 1,813. 8 Effective Exchange rate index, nominal 127. 2 126. 5 126. 2 125. 8 125. 5 121. 8 123. 9 119. 0 127. 6 126. 5 124. 6 122. 5 121. 0 Current account [bil. $] [844. 6] [841. 4] [767. 1] [775. 2] [763. 1] [446. 0] [619. 7] [846. 4] [945. 4] [807. 1] [800. 4] [832. 2] [812. 1] Saving rate [%] 4. 2 4. 3 4. 6 4. 6 5. 1 8. 8 16. 8 11. 9 3. 5 4. 4 5. 5 6. 3 6. 6 Housing starts [mil. ] 1. 4 1. 4 1. 3 1. 3 1. 3 1. 3 1. 4 1. 6 1. 6 1. 4 1. 3 1. 4 1. 4 Unit sales of light vehicles [mil. ] 15. 3 15. 4 15. 0 14. 8 14. 7 17. 0 14. 5 15. 0 13. 8 15. 1 15. 1 15. 9 16. 0 Federal surplus [fiscal year unified, bil. $] [2,712. 9] [714. 5] [1,411. 3] [1,829. 8] [2,369. 0] [1,022. 0] [3,348. 2] [2,580. 4] [1,418. 1] [1,667. 1] [1,698. 8] [1,847. 0] [1,900. 7] As of June 15, 2023. Quarterly percent change represents annualized growth rate; annual percent change represents average annual growth rate from a year ago. Quarterly levels represent average during the quarter; annual levels represent average levels during the year. Quarterly levels of housing starts and unit sales of light vehicles are in annualized millions. Quarterly levels of CPI and core CPI represent year-over-year growth rate during the quarter. Exchange rate represents the nominal trade-weighted exchange value of U. S. dollar versus major currencies. f--forecast. Sources. S&P Global Ratings' Forecasts, S&P Global Market Intelligence Global Linked Model
The U. S. economy may prove more resilient in the second half of 2023 than many forecasters had expected. Morgan Stanley Research has consistently called for a soft landing, marked by a moderate economic slowdown rather than a recession, but new data indicate that the touchdown may be even gentler than expected. Even better, a number of factors should keep new areas of growth from contributing to continued inflation. Here’s what investors should understand about the economic outlook over the coming months
A More Positive Picture for GDP
In the first quarter of 2023, real gross domestic product [GDP] grew at an annualized pace of 2. 0%, and we are currently tracking real GDP growth for the second quarter at 1. 8%. Based on recent data, we are now raising our forecast for real GDP growth by 0. 9 percentage points in 2023 to 1. 3% for fourth quarter over fourth quarter and 1. 4% for 2024
What is driving the change? First, investment in non-residential structures is the largest contributor, contributing 0. 3 percentage points to the upward revision to GDP growth. In particular, spending on manufacturing construction in the technology industry is up 235% over the 12 months ending in May, with other manufacturing spending up 7%
Second, state and local investment is also stronger than expected. The November 2021 Infrastructure Investment and Jobs Act has increased public investment in infrastructure, helping to mitigate more than a decade of persistent underinvestment
These two factors bolster our longstanding rationale for a soft landing, based on the following
Shrinking consumption and gradually decelerating inflation. A rising savings rate is cutting into consumer spending, bringing down the prices of goods and services
Slowing job growth. Although unemployment remains low, job gains are likely to slow down. We continue to forecast an unemployment rate of 4. 0% in the fourth quarter of 2023 and 4. 4% for the end of 2024
Housing recovery. After eight straight quarters of decline, the housing correction has hit bottom. For the second quarter of 2023, residential investment is turning upward at an annualized pace of 0. 3%
Avoiding Additional Inflation
Our forecast for GDP growth shows that the economy is not declining enough for the Federal Reserve to start cutting rates. However, core inflation and job creation are moving in the right direction. The previously underestimated growth in construction and infrastructure is unlikely to push inflation higher
- With construction costs coming down, investment in non-residential structures is growing substantially, while price growth has been half the pace of the prior four quarters
- Construction is labor-intensive, and although wages may increase with demand, the labor supply overall is increasing
- Infrastructure investment can meaningfully lift productivity and potential GDP growth. Higher productivity lowers companies' labor costs, reducing pressure on prices
All of these factors strengthen the case for a soft landing for the U. S. economy in 2023. As a result, we continue to believe that the federal funds rate has peaked this year at 5. 375% [the midpoint of the 5. 25%-5. 5% range announced on July 26], with the first cut coming in March 2024.
Will the US economy get better in 2023?
GDP growth is decelerating ; while GDP increased by about 1. 5% annualized in the first half of 2023, it's expected to dip to 0. 5% annualized in early 2024. Source. Bureau of Economic Analysis, Bureau of Labor Statistics, J. P. Morgan.
What is the economic prediction for 2023?
Over the 2023–2025 period, in CBO's latest projections. Economic growth slows and then picks up . The growth of real [inflation-adjusted] gross domestic product [GDP] slows to a 0. 4 percent annual rate during the second half of 2023; for the year as a whole, real GDP increases by 0. 9 percent.
What is the GDP growth forecast for 2023?
Global real GDP is forecasted to grow by 2. 7 percent in 2023, down from 3. 3 percent in 2022. We expect further slowing to 2. 4 percent in 2024. Economic growth is moderating under the weight of still high inflation and monetary policy tightening.
What will America's total GDP be in 2023?
GDP in the United States is expected to reach 25896. 00 USD Billion by the end of 2023, according to Trading Economics global macro models and analysts expectations.