Slower Growth, Slower Hikes

December is a natural time to look back and see how the year compared with our expectations. But a year like 2022 can throw off even the best forecasters.

We came into the year expecting the Fed to end asset purchases and raise rates; we did not anticipate such an aggressive pace of hikes. We expected inflation to calm; it is only healing now, after a painful surge through much of the year. We certainly did not expect the Russia-Ukraine war and the ensuing distortion to energy and food markets that drove so much uncertainty this year.

While it is incumbent on us to expect the unexpected and plan for worst-case scenarios, we should all take some pride in the resiliency seen throughout the economy in recent years. In the face of high inflation, ongoing health concerns and lingering supply shortages, businesses kept hiring and consumers kept spending. That resilience gives us hope that the economy can escape contraction in the year ahead: growth will be slower, but falling inflation and steady employment can keep us out of contraction.

Key Economic Indicators

Influences on the Forecast