Posted January 26, 2023

Kiplinger warns, don't use late '22 economy as a '23 predictor

The economy is slowing, despite strong GDP growth of 2.9% and 3.2%, in the fourth and third quarters of 2022, respectively, a Kiplinger Economic Outlook stated.

Staff economist David Payne said examples of recent economic weakness include: a second consecutive month of industrial production declines and a continuing drop in housing starts and sales.

Half of 2022's Q4 growth was attributed to businesses adding to inventories, which could indicate weakening purchases.

"Even the strong labor market is showing hints of a slowdown," Payne wrote, "with a widespread drop in hours worked across industries, plus reports of mass layoffs by major corporations. The odds of a recession starting later in the year are about 60% at the moment.

He added, "On balance, GDP growth slowed to 2.1% in 2022 and will slow further to 0.8% in 2023 if there is a mild recession. If a recession can be avoided, growth in 2023 will likely be around 1.3%."

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