Economic Commentary

We break down timely topics, centered on the major economic events around the world and their impacts to financial markets, in order to help you simplify client conversations around important investing decisions.

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Economic Commentary

Strong Q3 but higher interest rates may finally begin to bite

Consumers are rounding out a strong third quarter which should result in another acceleration for real GDP growth to an annualized pace above 4.0 percent. But the momentum for spending is waning in the face of even higher interest rates and lingering inflation, while job gains continue to weaken. Moreover, the resumption of student loan payments, a likely government shutdown, and ongoing auto strikes set the stage for a sharp growth slowdown in the fourth quarter. Still, the long-awaited recession should be delayed into early 2024 and we expect the downturn to be modest in length and severity with activity rebounding over the second half of next year. Monetary policy should remain restrictive well into 2024, a downside risk for a deeper recession should the lack of credit and worsening affordability cut into consumer and business activity more than expected. 

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Economic Commentary

Higher-for-longer rates: Weekly Economic Review & Outlook

The Fed left the fed funds rate unchanged at the September meeting but showed a higher-for-longer path in their interest rate forecasts. The latest Summary of Economic Projections (SEP) painted the picture of a soft landing, with a mild dip in economic growth and modest rise in unemployment next year. In last week’s housing data, existing home sales fell again to the slowest pace since January, while housing starts also dropped due to a weak month for apartment construction. 

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Economic Commentary

Service inflation is still too hot: Weekly Economic Review & Outlook

The core CPI was stronger than expected in August, underscoring the sticky nature of inflation in the service sector. The Fed is highly unlikely to pursue another rate hike this week, but an increase is still on the table for November or December. In consumer news, the August retail sales report showed that some wind has been taken out of consumers’ sails as still-high inflation and slowing earnings growth cut into disposable income. 

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Economic Commentary

Service sector is still humming: Weekly Economic Review & Outlook

Consumers maintained their buoyant pace of spending on services, which includes travel and dining out, by further dipping into their remaining pandemic-related savings. This in turn is helping to propel service-side activity and the economy overall as real GDP growth is poised to accelerate to at least a four percent annualized rate in the current quarter. Even with this strong economic backdrop, multiple Fed officials signaled in speeches last week that another pause in its tightening cycle should be expected in September since inflation has been trending meaningfully lower and economic growth likely slows sharply in the fourth quarter. 

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Economic Commentary

Podcast: What remains on Congress’s to-do list for 2023?

Nationwide's Senior Economist, Ben Ayers, and Senior Director of Governmental Relations, Carson Lewis, share their outlook on governmental action and the potential economic impact. • What does Congress hope to accomplish before the end of the year? • What impact could the 2024 election have? • What support could Congress provide in response to recent national disasters and a potential economic downturn?