Policymakers and business leaders will closely eye the release of data on Thursday set to show whether the U.S. economy continued to grow at the outset of 2023, defying recession fears.
The data, which measures gross domestic product for three months ending in March, will offer a snapshot of economic activity over a period that brought job and stock market gains but also a banking meltdown on a scale last seen in the 2008 financial crisis.
The economy is expected to have grown at a 1.1% annualized rate over the first three months of 2023, according to a forecast updated by the Atlanta Federal Reserve on Wednesday.
The forecast would mark a slowdown from a 2.6% annualized growth rate over the final three months of 2022. In turn, that performance marked a downshift from 3.2% growth in the previous quarter.
The widely anticipated measure arrives at a sensitive moment for the U.S. economy.
Over the last year, the Federal Reserve has imposed an aggressive string of interest rate hikes last seen in the 1980s.
The policy aims to slash inflation, but risks slowing the economy and bringing about a recession.
So far, the approach has succeeded in cooling price hikes, but fallen short of the Fed's goal.
Consumer prices rose 5% last month compared to a year ago, extending a monthslong slowdown of price increases, but leaving inflation more than double the target rate of 2%.
Federal Reserve Board Chairman Jerome Powell listens during an open session of a Financial Stability Oversight Council meeting at the Department of the Treasury on April 21, 2023 in Washington, DC.
Alex Wong/Getty Images
Meanwhile, a variety of measures suggest that economic performance remains robust, but has slowed in recent months.
The U.S. added 236,000 jobs in March, which marks strong job growth, but a reduction from an average of 334,000 jobs added each month over the previous six months, according to government data released last week.
Meanwhile, U.S. retail sales fell moderately in February but remained solid, suggesting that households still retain some pandemic-era savings.
Still, the economy remains under threat of a recession.
Fed economists said in March that they anticipate a "mild" recession later this year, escalating a previous forecast, central bank meeting minutes showed.
Sixty-five percent of economists expect a recession within the next year, according to a Bloomberg survey last month.
Many observers define a recession through the shorthand metric of two consecutive quarters of decline in inflation-adjusted GDP.
The National Bureau of Economic Research, or NBER, a research organization seen as an authority on measuring economic performance, uses a more complicated definition that takes into account several indicators that must convey "a significant decline in economic activity spread across the economy, lasting more than a few months," the group says.
This definition determines whether a downturn is formally designated as a recession, since the NBER is the official arbiter on the subject.
