Economic Update | May 2023

This month, Ginger Chambless, Head of Research for JPMorgan Chase Commercial Banking, provides perspective into the latest stats on labor, inflation, commodities and other factors affecting the economy.

For a weekly dive into the latest economic and market data, check out our Economic and Market Update. 

Economy: Consumer spending for services like travel has remained solid in 2023

Consumer spending resilience, especially for services like travel, is driving better-than-expected US economic growth to start 2023.

Labor: US job growth slowed in March, but remains solid in historical context

Although the March payroll gains were the slowest in two years, in a historical context, labor market conditions remain strong.

Inflation: Core goods inflation has slowed, while services remain elevated

Core services inflation is sticky and on an upward trend since 2021, reflecting elevated shelter costs and rising wages.

Commodities: Oil prices have bounced about 15% from the March low

Oil prices are back to where they started the year but well below last year’s peak following the onset of the Russia-Ukraine war. We expect prices could rise modestly through the rest of the year.

Interest rates: Fed hiking cycle is nearing the end game

If our 25bp hike forecast at the May meeting is correct, Fed Funds would be 500bp higher in 14 months, one of the fastest hiking cycles in history. We expect an extended pause while markets expect cuts.

Debt Ceiling: Negotiations are heating up in Washington

If a resolution to lift the debt ceiling comes down to the wire, we could see market volatility rise and consumer confidence drop. Around the 2011 episode, the S&P 500 corrected 15%.

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