FORECAST 2023 FORECAST 2023 Growing Turbulence


Gathering Clouds AND


By Phillip M. Perry B


usinesses are preparing for a more challenging operating envi- ronment in 2023. After two years


of frenetic commercial activity fueled by a post-pandemic recovery, strength- ening headwinds will tap the breaks on a robust economy. Among the culprits: rising inflation, higher interest rates, a softening housing market, continuing supply chain disruptions, declining capital investments, and escalating costs for wages and energy. The loss of some helpful economic


initiatives is only adding to the down- ward pressure. “Government stimulus packages, ultra-low interest rates, and strong money supply creation had been helping to compel business activity until mid-2022,” says Anirban Basu, chairman and CEO of Sage Policy Group. “All those fundamentals have been inverted.”


FIRST QUARTER 2023 Economists are adjusting their fore-


casts to reflect the new normal. “We project real Gross Domestic Product (GDP) will increase by 0.7 percent in 2023,” says Bernard Yaros Jr., assis- tant director and economist at Moody’s Analytics. “The expectation for 2022 is 1.7 percent. Both figures represent much slower activity than the 5.9 per- cent increase of 2021.” (GDP, the total of the nation’s goods and services, is the most commonly accepted measure of economic growth. “Real” GDP adjusts for inflation.) All of the above conditions should


have a depressing effect on corporate profits, projected by Moody’s Analytics to increase at a 5.2 percent clip in 2023. That represents a decline from the 7.9 percent figure anticipated for 2022. Both estimates are much lower than the 25 percent increase of 2021.


Takes A Breather Economists expect growth to slow in 2023.


The Economy


U.S. Gross Domestic Product (GDP) Annual % Change


2014: 2.3% 2015: 2.7% 2016: 1.7% 2017: 2.2% 2018: 2.9% 2019: 2.3% 2020: -3.4% 2021: 5.9% 2022: 1.7%


2023: 0.7% Sources: World Bank; projections by Moody’s Analytics.


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