Market Extra: Forget recession — the U.S. is heading for a ‘slowcession’ that could last all year, Moody’s warns

by | Jan 3, 2023 | Stock Market

Even if the U.S. avoids a recession in 2023, American consumers and investors could face a grinding slowdown that likely won’t let up until 2024, according to a new outlook published by Moody’s Analytics chief economist Mark Zandi. Zandi even coined a new term to describe this kind of protracted downturn, calling it a “slowcession” in a note sent to clients and reporters on Tuesday.

The mainstream view on Wall Street is that as the Federal Reserve slashes interest rates to help cushion the blow for investors and consumers, the U.S. economy will likely enter a brief recession during the first half of 2023, but that it will be over long before year’s end. Still, while Zandi believes the Fed’s most aggressive interest-rate hikes in decades will have a deleterious impact on GDP growth, he thinks a strong U.S. labor market and other factors relating to the consumer should help prevent an outright contraction in the economy. “There is no doubt the economy will struggle in the coming year as the Fed works to rein in the high inflation, but the baseline outlook holds that the Fed will be able to accomplish this w …

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