Brace yourselves, folks! The all anticipated fed funds rate got hiked by 25 bps in March. But the future remains uncertain admist the recent turmoil in the financial/banking system. 🧵
Here's a sharing of some economic data predictions through out 2023 and also interesting charts for your visuals.
🔴Consumer confidence to decrease
The recent banking troubles might affect confidence as retail consumers do not have much exposure to financial markets.
CCI is more closely related to business conditions and employment situations.
🟡Q4 GDP (estimate)
Not expecting much revisions. Q4 profits likely showed a decline in growth due to soft consumer and business demand. Input costs remain high, particularly for labor, which likely decreased profit margins.
Difficult for firms to make new investments.
🟢Consumer spending
Consumer spending started strong but seasonal distortions could be affecting recent figures. Income growth is a key driver of spending.
Sturdy jobs market and high levels of excess saving helps sustain spending even with recent banking sector issues
🟡Interest Rates
Fed may raise interest rates by 25bp in May due to persistent inflation concerns. However, rates could be held steady in June as the effects of previous tightening are still being felt.
2H2023 could see a slowdown and rate cuts expected in Q4 2023
🔴Credit conditions
Consumers seek less credit as interest rates rise. Credit card limit increase applications increased, while auto loan application rates declined and highest rejection rates since Feb 2017.
Tighter and more expensive credit could slow the pace of spending.
🔴Banking Sector
Bank failures have led to concerns about their stability and impact on the economy. Tighter lending standards would shrink the amount that smaller banks can get loan for.
It's not impossible that we could see a higher probability of recession in 2H2023.
