Answering the questions in our US forecasters’ inbox

In this new quarterly Research Briefing series, we answer the top five questions we’ve recently received from clients. Questions about the labor market and inflation outlook, the probability of recession, risks of more supply shocks, and the impact of China’s reopening were most prevalent.

What you will learn:

• Our baseline forecast is for the US economy to suffer a mild recession in 2023, driven by the Fed’s tight monetary policy and tighter financial conditions. Recent economic data signal the economy entered 2023 on a weak footing, though the labor market is a key exception as it remains resilient. We look for the economy to slide into a recession in Q2 as consumers limit spending and businesses become more reluctant to hire and invest. Congress could make the recession worse if it refuses to raise the debt ceiling.