Strength of consumer spending keeps the expansion going; local and national labor markets continue to slow

U.S. real gross domestic product increased at a seasonally adjusted annual rate of 2.8% in the third quarter, down from a revised 3.0% in the second quarter. A "soft landing" for the economy may be in sight. In this Quarterly Market Report, we compare current economic conditions with two other episodes in recent history--one of which resulted in a soft landing (no recession) and one which resulted in a recession. We will identify the key differences that led to the different outcomes. There are definitely reasons to be optimistic. However, some of the factors that could be critical in helping the U.S. avoid recession are outside of our direct control (geopolitical events, oil prices, productivity growth, etc.).

In the local and regional economy there is also reason for both optimism as well as concern. Labor market numbers are still weaker than they were a year ago. The unemployment rate continues to tick upward. Because of the region's concentration of manufacturing, the Quad Cities region, like many midwestern urban areas, is dealing with the effects of higher interest rates and reduced demand for manufactured goods. Even so, if the strength of the consumer can help the national economy can avoid recession, it will provide a much-needed cushion to regions like ours. In our Business Outlook Survey this quarter, survey respondents expressed more optimism about the next six months than about the previous quarter, lending support to the idea that the positives at least outweigh the negatives currently visible on the horizon.

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