The economy has so far been resilient in the face of the FOMC’s series of interest rate increases to battle inflation. However, there are signs that the increases are influencing growth, and many economists expect the economy to weaken substantially in the coming quarters.
The US economy slowed in the first quarter of 2023 in a sign that economists say indicates growth will continue to be weak for the remainder of the year.
The global economy continued to recover during the quarter following a shaky 2022. Inflation remains persistently and painfully high, but the rate of inflation has eased a bit since the FOMC instituted the most aggressive program of interest rate increases in 40 years.
The US economy posted modest growth in the quarter, but continues to grapple with high inflation, rising interest rates, and slowing employment growth.
The global economy is currently teetering on the brink of recession after having delivered a strong post-pandemic recovery. Decades-high inflation caused by supply shortages and rising commodity prices – as well as an aggressive central bank policy response – is undoing the global expansion.
US consumers and investors have become increasingly pessimistic this year because of historically high inflation, the FOMC’s aggressive interest rate increases, and the war in Ukraine, among other things.