These are the forecasts for 2023 of the major banks
Inflation will subside in 2023, but it is not known at what pace. On this depends whether central banks will stop raising rates, but will not cut them.
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Nueva York / Bruce Emmerling (Pixabay)
What does this year hold in store for the economy? Banks have not very divergent answers on this question. But all the answers start from a single question: What will happen to inflation in 2023?
This is the fundamental issue, because the policy of the Federal Reserve and, in general, of central banks depends on it, and the extent of the recovery in activity depends on monetary policy.
Key issue: inflation
And we talk about recovery, because one word that appears in all the reports is recession. Goldman Sachs says that "the US should narrowly avoid recession as core PCE inflation slows from 5% now to 3% in late 2023 with a ½pp rise in the unemployment rate."
And "To keep growth below potential amidst stronger real income growth, we now see the Fed hiking another 125bp to a peak of 5-5.25%."
JP Morgan
At the heart of this analysis is what happens to inflation. JP Morgan makes it very clear:
JP Morgan believes that "Despite remaining above central bank targets, inflation should start to moderate as the economy slows, the labor market weakens, supply chain pressures continue to ease and Europe manages to diversify its energy supply.
HSBC
The opinion of HSBC focuses on a different aspect:
And Jim O'Donell, CEO of the Global Wealth division of IITC considers that "As inflation subsides, we see the US Federal Reserve pivoting from interest rate hikes to cuts and markets shifting focus to 2024 recovery, unlocking more potential opportunities for investors."
No rate cuts
But there will be no rate cuts in 2023, if Credit Suisse forecasts hold true:
The vision of Barclays is no more optimistic: "Even if central banks stop hiking early next year, they might have to hike further later in the year. If 2022 was the year of policy "shock and awe," 2023 will be the year of living with it".
By a different route, the following concur in the same opinion BNP Paribas:
Strengths of the United States
In fact, the U.S. economy seems to have some strengths that other economies, such as those in Europe, lack. Will the U.S. economy reach recession? "We expect any recession to be mild because the jobs market will likely remain strong. Quite simply, it's difficult to expect a deep recession with such a robust labor market," Morgan Stanley says.
BNP Paribas adds:
This is not 2008
JP Morgan cites another strength of the U.S. economy:
Europe is heading for recession
The situation in Europe and China is different. "Advanced economies are heading into a recession, led by the euro area and the UK. But the US will also likely contract across 2023, as the lagged effects of a super-fast hiking cycle finally hit the economy," according to Barclays. Credit Suisse believes that the United States can avoid recession, with implications for other economies:
According to Goldman Sahcs, the resilience of the U.S. economy "contrasts with a European recession and a bumpy reopening in China."
Global overview
The last important consideration comes from Credit Suisse: