Skip to main content

Continued growth even as clouds build over the outlook for 2023

December 5, 2022

Current Trends

After a rebound during the third quarter, the economy showed continued growth in October, fed by the strong labor market. Consumer spending has remained resilient despite sharply rising costs with a jump in retail sales for October. Business sector growth slowed further, but firms continue to hire and expand while also preparing for weaker conditions ahead. Inflation cooled in October and may have peaked, especially for goods costs, but remains significantly above trend. Because of this, the Fed signaled that more rate tightening could occur over 2023 than previously estimated, adding to recession fears.

November neutral current scorecard. November negative future scorecard.

Future Outlook

The prevailing opinion is that the U.S. economy is trending towards a recession over 2023, albeit one that is likely to be moderate. Strong labor market momentum and lower debt obligations suggest that most households and businesses should be able to weather a period of higher interest rates and weaker activity. But there remain risks on both sides, centered on Fed actions over the next year. If the Fed is compelled to hike interest rates much more sharply to bring inflation to heel, the potential downturn could be longer and deeper. Conversely, should inflation slow more quickly, the Fed could ease policy sooner, reducing the recessionary impact.


  • 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