Imminent US Recession to Be Followed by Slower Economic Growth

Imminent US Recession to Be Followed by Slower Economic Growth

The economic outlook for the United States for 2023 has deteriorated under the weight of high inflation rates and rapid monetary tightening. Falling consumer and business confidence, softening consumption and investment, and geopolitics-induced energy shocks are likely to tip the economy into recession around the turn of the year.

However, the recession is projected to be short and mild, amid a strong labor market and relatively healthy consumer and business balance sheets. Beyond 2024, the US economy is likely to return to its slowing trend growth rate trajectory. Key risks around the longer-term US outlook are related to geopolitical frictions, environmental challenges, labor markets, and inflation.