The incoming activity data now show clearer signs of weakness, particularly in the most interest-rate sensitive components of spending. But there are still few signs of that moderation morphing into a recession. The rise in mortgage rates has weighed on mortgage demand and is now reflected in weaker housing activity, with housing starts falling back over the past few months. The latest survey measures of firms’ capex plans suggest that growth in business equipment investment has slowed sharply. But with easing shortages set to support spending on autos and help firms rebuild inventories, and lower inflation likely to mean that real incomes begin rising before long, we still think the economy will avoid a recession in the coming quarters.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services