U.S. Economic Outlook, October 2023

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

The U.S. economy’s remarkable resilience is complicating the lives of investors and the Federal Reserve. Despite war-disrupted commodity markets and one of the most aggressive monetary tightening phases in modern history, economic activity has remained strong. Consumers are still spending, and companies are still hiring and investing, though not at the same pace as last year.

Amid this positivity, the Federal Reserve has found it difficult to determine how high interest rates should go. But the recent tightening of financial conditions has caught the attention of U.S. central bankers, raising the likelihood that the Fed is headed for the exit ramp. We see the hiking cycle as complete, but the easing cycle is still distant.

While the U.S. economy has plenty of momentum, it also faces a series of headwinds, including the rise in organized labor actions, the potential for a government shutdown, and the resumption of student loan repayments. A slowdown still seems to be a sound bet, but the odds of a recession have to be respected.

Key Economic Indicators