Moodys: Prepare for a “economic slowdown” in 2023

But Moody's Analytics says the most likely scenario is “economic slowdown” (slowcession), a phase where economic growth is almost zero, but is managed to avoid total economic downturn.

In almost every scenario, the economy will have a difficult year over 2023,” wrote Moody's Analytics chief economist, Mark Zand, in a report published on Tuesday. “But inflation is dropping rapidly and the foundations of the economy are sound. With little luck and with the move taken by Fed, the economy can avoid falling. ”

Moody said that, in the phase of an economic slowdown, this term was created by Zandi colleague Crisitan deRitis economic growth <x0 is almost approaching zero, but never falls in the opposite direction” Unemployment would increase, but not at large.

In view of all recent concerns about the economy, such economic slowdown would be comforting to many.

Fear of the recession caused 2022 to be the worst year for the US stock market since 2008. In fact, the 19.4% drop in the S&P 500 index last year was the fourth largest decline since 1945, according to CFRA Research.

While the Federal Reserve is trying to curb the American economy from allowing continued inflation, business leaders and CEOs have become increasingly confident of the possibility of a 2023 recession.

Bank of America CEO Brian Moynihan recently told CNN that there is the possibility of a soft “recession”. Economists surveyed by Bloomberg assess with 70% the possibility of a recession in 2023.

Goldman Sachs estimates there will be a slight increase

Moody's study, which often refers to the White House, is not rejecting the risk of an economic downturn, as it warns that recession remains a <x0 serious threat” and says the economy is “te vulnerable” to a possible blow. The firm also predicts unemployment will reach 4.2% by the end of 2023, up from the current figure of 3.7%.

There is also the real danger of what is known as “self-fulfillment of”, where business owners and consumers, being nervous by the perceived economic situation, reduce so much activity that they become the very cause of recession they feared.

However, there are reasons why we argue about being optimistic to some extent about what lies ahead.

The labour market remains in a very good condition, inflation is being reduced, real wages are rising, gas prices are down, and Fed can be prepared to stop its interest rate growth campaign.

Last week, Goldman Sachs said it continues to believe that the American economy will avoid recession and there will be a slight economic growth where inflation will be reduced, but growth will continue./ CNN