Arrows indicating economic and market trends. Inflation: green arrow pointing down (slowing enough to halt interest-rate hikes by the Federal Reserve). GDP growth: red arrow pointing down (economic activity to slow). Wage growth: yellow arrow pointing up (real wage growth is accelerating). Unemployment: green arrow pointing up (suppressed by recovery of labor-intensive services). Consumer confidence: yellow arrow pointing down (moderated by worries over household budgets, recession, and finances). Volatility: yellow arrow pointing up (expected to move higher over economic growth and credit-quality concerns).
Source: Wells Fargo Investment Institute, as of December 31, 2023. Subject to change. GDP = gross domestic product. Fed = Federal Reserve.
Key Takeaways
- The U.S. economy faces risk of an economic slowdown because of household budget and financial pressure, elevated interest rates, and softening conditions in the labor market.
- Monetary restraint is reinforcing a pullback in fiscal stimulus, curtailing economic growth. Catch-up hiring to counter recent labor shortages is keeping job gains healthy but slowing with economic growth.