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National Economic Update
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The National Economic Update provided by Laura Dawson Ullrich, PhD, a Senior Regional Economist at the Federal Reserve Bank of Richmond, gives an overview of the U.S. economy as of October 2023. Despite sectors impacted by rising interest rates, economic growth in 2023 has exceeded expectations, particularly in Q3. Indicators show mixed signals, with strong consumer spending and impressive job growth, albeit varying by state. Mid-size metro areas like Charlotte, Raleigh, and Nashville are outperforming larger cities and rural areas due to industry and geographic factors.<br /><br />Inflation remains above the Federal Reserve's 2% target, though core inflation is decreasing. GDP growth was at 2.0% in Q1 and 2.4% in Q2, surpassing earlier flat growth predictions. Real consumption has maintained strength amid inflation, and credit card balances have reached new highs, though manageable when adjusted for income and price growth.<br /><br />Employment has surpassed pre-COVID levels nationally but varies by state; some states like Louisiana lag behind, while North Carolina and others have surpassed pre-COVID trajectories. Labor force participation has not fully rebounded and is projected to decline further. Prime-age labor force participation has seen increases, driven by higher female participation.<br /><br />Job openings have decreased from their peak without corresponding rises in unemployment rates, and nominal wage growth remains elevated above inflation, resulting in real wage growth for some. Producer prices have reverted to pre-COVID norms, while core CPI is primarily driven by housing costs.<br /><br />The Federal Reserve has significantly raised interest rates to curb inflation, and while potential economic headwinds remain, the possibility of achieving a "soft landing" appears more promising now than before. Small to mid-sized metro areas may fare better in the future, while large metros and rural areas will continue to face challenges.
Keywords
U.S. economy
economic growth
Federal Reserve
inflation
consumer spending
job growth
interest rates
labor force participation
GDP growth
metro areas
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