Recent Reports Changing Economists’ Minds

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Gross domestic product for the United States rose 3% in Q4 of 2022, which is slightly better than was expected and a positive trend even as consumer spending weakened. Orders for long-lasting goods were better than expected, and inventories showed a considerable increase. While inflation numbers indicated that price increases are slowing, they still remain above the Federal Reserve’s 2% target. “The mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter went on,” wrote Andrew Hunter, senior U.S. economist for Capital Economics.

However, the jobs report took a surprising turn for the start of 2023. The unemployment rate fell by 6,000 to 3.4% versus the estimate of 3.6%. That is the lowest unemployment rate since May of 1969 – a new record set after 53 years. The new comprehensive report on joblessness included part-time workers as well as discouraged workers, who are defined as people who are capable and willing to work, but have stopped applying due to consternation. While most economists still expect a recession is imminent, falling unemployment rates have caused reason to reconsider the length and severity of one.

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