Quarterly Economic & Market Observations

Presented by

Vincent Reinhart, Chief Economist & Macro Strategist

About this talk

As we step into 2023, we outline our core view that the Federal Reserve (Fed) will hold rates at a restrictive plateau, even at the risk of economic recession. Despite firmer financial conditions and fiscal drag, aggregate demand is expanding faster than potential output. These demand pressures build upon an already taut labor market. While inflation has receded, we think it will remain well above the Fed's goal as wages and service prices catch up. We believe other central banks will firm policy to deal with inflation stemming more from supply restraints than demand excesses, even more surely putting their economies into recession. Our discussion will review what did and, importantly, did not happen in 2022, our base case for 2023 and risks surrounding our view. Please view the transcript under the attachments tab for important disclosures.

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