In the first quarter of 2023, the Atlanta Fed’s GDPNow model predicted a growth rate of 7.6%, indicating that the United States is on track for its strongest full-year growth since 1984. However, there are still risks to this outlook that cannot be ignored. The omicron variant has shown us that the virus is still capable of surprising us, and inflation remains high. Additionally, the labor market remains tight, and there are major geopolitical risks looming over us, such as between Ukraine and Russia and with China over Taiwan.
Despite these challenges, forecasters must continue their work and make predictions about what will happen next. The past year has shown us that even when the outlook is for modest growth of 2%, anything is possible. With growth much stronger than this and the delta variant now in the rearview mirror, we can only wonder what will come next. As Yogi once said, “It’s tough to make predictions, especially about the future.”
Despite these challenges, it’s important to note that the Atlanta Fed’s GDPNow model has been proven to be a reliable indicator of economic growth in recent years. This suggests that while there may be some uncertainty in predicting exactly how strong full-year growth will be in 2023, we can have confidence in its overall direction.