Economic Update | January 2023

It's a new year, with new insights to uncover. Let’s start it off with a look at the economy with Ginger Chambless, Head of Research for JPMorgan Chase Commercial Banking.

For more insights and a comprehensive view into our 2023 outlook, check out our weekly Economic and Market Update.?

Economics and markets: A mild recession could set in as higher interest rates slow growth

Housing sector weakness and slowing demand for manufactured goods are the biggest sector headwinds in 2023. Still, healthy balance sheets could keep a downturn relatively shallow.

Labor: Elevated job openings indicate U.S. labor markets are still strong

Businesses have been raising wages to attract and retain workers. Job openings are still 40% above pre-pandemic levels, reflecting strong demand. Once hiring slows, wages will likely follow.

Inflation: Prices have moderated and should continue to ease in the coming months

Core goods inflation has begun to soften as supply chain bottlenecks ease, inventories get replenished and consumer spending priorities shift. Services inflation is high but could be flattening out.

Commodities: Metals prices have declined on slowing industrial production

Industrial base metals prices have fallen 50% from peak on slowing global growth but are still 25% above the five-year average. China reopening could cause prices to climb.?

Interest rates: The Fed funds rate is up 425bp since hiking began last March

Sharply higher Fed funds rate puts monetary policy into “restrictive” territory. We see two more 25bp hikes in February and March, for total hikes of 475bp and a terminal rate of 5%.?

Supply chain: Shorter delivery times signal bottlenecks are improving

There are signs–like shorter delivery times–that disrupted supply chains are starting to heal.

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