Feb. 3, 2023 — The National Retail Federation (NRF)’s chief economist Jack Kleinhenz has shared that a U.S. recession is unlikely and that the country may see slight economic growth, according to new information released in a recent NRF Monthly Economic Review.
“A month into 2023, the economy is facing stiff headwinds and—with the exception of easing inflation—will likely face more challenges before it gets better,” says Kleinhenz. “The debate on whether we are in a recession will heighten over the next few months, just like last year. But while households will probably feel recession-like conditions this year, I do not expect that the downturn will be severe enough to become an official recession.”
“The good news is that corporate and household balance sheets are in the best shape we’ve seen going into a downturn,” Kleinhenz continues. “This should make any economic slowdown mild and limit the downside risks despite my outlook for the economy to staddle a zero-growth path during 2023.”
NRF shares that gross domestic product grew 3.2% year-over-year in the third quarter of 2022 and while growth slowed to 2.9% in the fourth quarter, 2022 still came in at 2.1% above 2021. In addition, NRF notes that the National Bureau of Economic Research did not declare an official recession because the decline in the first half of 2022 affected only some sectors of the economy and not a significant economic decline overall.
More specifically, consumer spending grew 2.8% for 2022, slowing later in the year with a drop of 0.2% month over month in November and another 0.3% in December. Retail sales as defined by NRF (excluding auto dealers, gas stations, and restaurants) were down 0.5% month over month in December, shared the organization. NRF reveals that combined November to December holiday sales were up 5.3% over 2021 but were slower than forecasted.
Of particular interest to the independent eyecare professional, NRF shares that small businesses are continuing to hire and the December unemployment rate was at a 50-year low of 3.5%.
For more information on the labor market and overall economic outlook, head to nrf.com.