There’s been a lot of negative rhetoric in the media about the state of the U.S. economy.
Throughout 2022, interest rates soared in an effort to curb inflation, which drove up consumer prices and the cost of borrowing. Because of this, experts and investors warned that in 2023, the U.S. economy would most likely experience a slowdown, and some even warned of an imminent recession.
But with 2023 well underway, have the doom and gloom predictions about the U.S. economy really come to fruition? In other words, what’s the current state of the U.S. economy?
According to several key economic trackers, the U.S. economy has been faring a lot better than anticipated. So much so, that some experts are debunking the recession rumors altogether. Below, will touch on some of the key economic trackers that explain why economists are feeling optimistic—and why you should be, too.
The Stock Market Has Rallied
According to economic researcher Brad Comincioli, stock prices are a key economic indicator because they “reflect expectations about profitability, and profitability is directly linked to economic activity.”
Therefore, if a key stock market index like the S&P 500 is up, that typically means investors are feeling optimistic about economic growth. As of now, the S&P 500 is up 6.67% year-to-date, which is an increase of more than 14% from its latest low in mid-October last year.
This means we’re officially out of the bear market—but according to Christopher Harvey from Wells Fargo, we haven’t quite reached bull market status either. According to Harvey, investors should “expect some giveback, but not a sharp near-term reversal.”
So, while things aren’t quite bouncing back as they did in 2020, the U.S. stock market is in relatively good shape currently.
Unemployment Remains Low
Unemployment rates are also a good indicator of how a country’s economy is faring.
Low unemployment rates are a good sign, and according to the latest report released by the U.S. Bureau of Labor Statistics, the U.S. unemployment rate has dropped to 3.4%—that’s not only lower than the market expectation of 3.6%, but it’s also the lowest level it’s been since 1969, more than 54 years ago.
Job growth was also high last month, with more than a half million jobs created in January alone. According to the U.S. Bureau of Labor Statistics, this job growth was “led by gains in leisure and hospitality, professional and business services, and health care.”
Gross Domestic Product (GDP) Growth Expected
Because GDP measures the value of its goods and services produced within a certain time period, it’s an excellent indicator of how a country’s economy is doing. As of the latest figures, GDP in the U.S. has continued to increase—in Q4 2022, real GDP in the U.S. grew by 2.9%, and overall growth for the year was 2.0%.
And predictions from the International Monetary Fund expect more growth on the horizon, meaning the U.S. could very well avoid the recession that many experts were expecting.
Why Now Is the Time to Hire
While the state of the U.S. economy is a lot better than the news is making it out to be, it’s important to acknowledge that the economy has certainly seen brighter days.
However, there’s a silver lining to this luke-warm economic climate we’re currently in the midst of—for companies and business leaders, this period of calm is a great time to sit back, reprioritize, and rebuild your teams to make sure your company is set up for success when things start to inevitably pick up.
If you don’t hire now, you could be scrambling for talent in the future, or battling with other companies for the best candidate, which is when salaries start to hike up. So, to avoid a bidding war, start hiring now.
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