Things are slowing down in the economy, FTR’s forecasting for 2023 shows.
That includes inflation, which Avery Vise, FTR vice president for trucking, says seems to be cooling. However, the Federal Reserve will continue to react to higher-than-normal inflation with interest rate hikes to slow down the economy.
Other indicators are expected to hold flat at best, including consumer spending. One rate that fell off a cliff: personal savings, which hit an abysmal 2.4% in November. That indicates a more negative environment, Vise said in a Thursday webinar.
“Personal savings is a red flag for consumption and the overall economy,” Vise says. But wealth remains in the consumer sector, with stimulus-fueled cash still showing up in the market as late as the second quarter of 2022. Third quarter numbers, when available, are expected to be down sharply, Vise says.
Payroll and retail inventories are also flattening out from the volatility during the COVID years, and FTR expects that to continue, which is a positive sign that the economy won’t need a harsher correction as spending hits the brakes.
“We’ve had to build a lot of inventory to support the level of consumption,” Vise says. “This raises some concerns because we expect consumption to fall off over the next few quarters. If these levels were to stay where they are, we would expect to see a correction. Retailers has allowed that ratio to get pretty much out of hand throughout the first half of 2022. This trend is reassuring.”
