Higher GDP Growth Forecast for 2nd Half of 2023
Key Takeaways
Real GDP grew 2.1 percent in the second quarter of 2023. While this is slightly below long-term trends, it is consistent with an economy that continues to recover from supply disruptions and adjust to rising interest rates. However, recent forecasts indicate an improvement may be on the horizon. A "soft landing" in which inflation returns to its desired level without a recession is still a possibility, though not assured. Both Iowa and Illinois are performing better economically than the national average according to a closely watched state-level index.
Inflation has improved, though the rate of improvement has slowed in the second quarter. Core inflation remains stubbornly high. The Quad Cities continues to have slightly lower inflation than the U.S. average.
The labor market continues to be resilient in the face of interest rate increases. Though unemployment has ticked up slightly, it remains below average and nowhere near recession levels. Locally, job growth remains positive and approaching pre-pandemic levels. This has put some upward pressure on some wages, especially in counties with lower unemployment rates, though most wages remain competitive compared to national averages.
There are some areas of concern for the remainder of 2023. Economic weakness in China, the resumption of student loan payments and the possibility of a government shutdown if a budget deal is not reached are chief among the concerns. Even so, there are good reasons for optimism that a soft landing may be achieved and economic growth can return to the long-run trend.
