United States economic outlook: 2022 year-in-review and early 2023 developments

The United States economy grew by 2.1% in 2022. Consumer spending was the main driver of growth. The economic outlook improved in the second half of 2022, following two quarters of negative growth, and this momentum has carried over into early 2023. The labour market was strong in 2022 and continued to show strength in early 2023. Inflation rose to 8% in 2022, the highest annual level in four decades, but slowed to 5% in March 2023. The Federal Reserve approved nine interest rate increases between March 2022 and March 2023 to tame inflation. March 2023 saw heightened market stress owing to bank failures that were partly driven by the loss of asset value as interest rates rose from near zero. Unease about the banking system’s stability and a political stalemate over raising the debt limit are adding to an already high level of financial anxiety, as the two economic challenges become intertwined. The United States economic outlook reports are published three times a year and follow the main macroeconomic developments of the United States economy and how they could affect financial conditions in Latin America and the Caribbean.