U.S. Economic Outlook, June 2023

The Northern Trust Economics team shares its outlook for U.S. growth, employment, interest rates, and inflation.

The first half of the year has brought severe risks to the forefront. The failure of three large banks sparked fears of systemic distress in the financial sector. Worries then shifted to the worst-case potential outcomes of the debt ceiling standoff. Mercifully, neither episode has led to a financial crisis; the broader economy has persevered.

Speculation has returned to the potential for a soft landing. Last summer, it felt like a long shot; however, a year later, it’s still possible. Employment and consumer spending remain strong. The challenge will be to calibrate the appropriate monetary policy to make further progress against inflation.

Our outlook remains one of marginal growth in the quarters ahead for the economy overall. The low rate of growth reflects substantial ups and downs in individual sectors. A key risk looms from the lagged effects of monetary and credit tightening; headwinds from slower demand and higher borrowing costs are not to be dismissed. But as long as employment holds up, so too will prospects for growth.

Real Gross Domestic Product