Meet the Team
Economic Commentary

Growth trends lower but little imminent sign of a downturn

April 25, 2023
Person leans over coffee shop counter.

Hiring and spending activity slowed further in March as consumers and businesses look for ways to cut expenses with borrowing costs climbing and the economic outlook dimming. But the strong momentum from the job market should deter an outright recession for some time with solid income growth supporting purchasing power. While the banking crisis has settled for now, banks are poised to further tighten lending standards and another rate hike from the Fed looks likely in early May. Most leading indicators suggest that a downturn is on the way, but pre-recession periods can linger, especially with the tight labor market unlikely to ease quickly.

Key Takeaways:

  • Job gains slowed further in March, but the economy still added more than one million jobs over the first quarter. Another rise in the labor force participation rate is a positive sign of improved labor supply.
  • Consumer are cutting back spending, especially on discretionary items, as the extended period of high inflation squeezes household budgets.
  • Services inflation has shown no sign of cooling in recent months, adding pressure on the Fed to maintain restrictive monetary policy for some time.
  • Financial markets are pricing in rate cuts by the Fed over the second half of 2023, helping to boost investor sentiment and lower Treasury yields. However, we do not see the Fed cutting rates until 2024 due to still hot core inflation trends.

Future Scorecard - April 2023Current Scorecard - April 2023


The information in this report is provided by Nationwide Economics and is general in nature and not intended as investment or economic advice, or a recommendation to buy or sell any security or adopt any investment strategy. Additionally, it does not take into account any specific investment objectives, tax and financial condition or particular needs of any specific person.

The economic and market forecasts reflect our opinion as of the date of this report and are subject to change without notice. These forecasts show a broad range of possible outcomes. Because they are subject to high levels of uncertainty, they will not reflect actual performance. We obtained certain information from sources deemed reliable, but we do not guarantee its accuracy, completeness or fairness.

Nationwide, the Nationwide N and Eagle and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company. © 2023 Nationwide.