Skip to main content

Strong job growth and slower inflation boost the near-term outlook, but clouds remain for 2023

September 7, 2022

Current State

Inflation finally turned downward in July as the sharp drop in gasoline prices and steady improvement in supply chains eased price pressures — but prices were still broadly higher. Job growth was robust again for July while the unemployment rate matched its 50-year low as strong hiring trends continue within many industries. The stock market has rebounded too, pushed higher by expectations that the Fed won’t have to tighten as much as previously feared. But survey data from consumers and small businesses remain dreary and the yield curve is closing in on a full inversion — historically, a strong signal of recession conditions about a year later.

dial-current-scorecard-august-2022 dial-future-scorecard-august-2022

Future Outlook

Storm clouds continue to build over the outlook. Recession odds for 2023 (although far from certain) climb with each rate tightening by the Fed, while economic growth is likely to be below-trend in coming years even if a soft landing can be achieved. But the chances of a severe downturn at the end of this cycle are relatively small. Balances sheets for consumers and businesses are in solid shape with few signs of at-risk debt burdens, while household wealth has risen sharply. This suggests fewer cutbacks in spending and investment if conditions worsen over the next year, and a more modest overall recession — should one occur.


  • The information in this report is provided by Nationwide Economics and is general in nature and not intended as investment or economic advice, or a recommendation to buy or sell any security or adopt any investment strategy. Additionally, it does not take into account any specific investment objectives, tax and financial condition or particular needs of any specific person.

    The economic and market forecasts reflect our opinion as of the date of this report and are subject to change without notice. These forecasts show a broad range of possible outcomes. Because they are subject to high levels of uncertainty, they will not reflect actual performance. We obtained certain information from sources deemed reliable, but we do not guarantee its accuracy, completeness or fairness. Nationwide, the Nationwide N and Eagle, and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company. © 2022 Nationwide