A 2.9% Increase

January 30, 2023

The Fed Open Market Committee will meet this week and again in March. With prices moderating in many categories, a growing number of economists are suggesting that the Committee may opt for smaller rate increases at both meetings–maybe a 25-basis point increase. The economy grew at a rate of 2.9% in the fourth quarter, a drop from the third quarter where growth was 3.2%. The personal expenditures consumption deflator crept up one tenth of a percent in December and is down 5% over the last year. That is the slowest growth for inflation in almost 18 months.

A range of economists predict growth of real GDP in the economy this year to be around 1.3%. That would be a drop from 2.1% growth in 2022. The net results of higher borrowing costs and slower economic growth is a mixed bag for Delaware businesses. For the lending industry, historically low interest rates were a challenge. Heavy industry and capital projects now cost more, and higher mortgage rates will mean a cooling of the residential real estate market in some areas.

News You Can Use

This is a reasonably quiet week for economic news. On Tuesday we’ll see Q4 rental vacancy rates, while Wednesday brings us the ADP employment report for January and December job openings data. December construction spending and Fed Chair Powell remarks are also scheduled for Wednesday. Thursday brings us factory orders from January and we wrap up on Friday with January unemployment results.

SoFi Technologies and Whirlpool kick off the week of companies with earnings calls. Tomorrow’s headliner is Advanced Micro Devices (AMD), Amgen, Ashland, Electronic Arts, General Motors, Pfizer, and UPS. Meta Platforms, Waste Management, and Corteva headline calls scheduled for Wednesday, and they’re joined by Humana, eBay, and Aflac. Apple, Air Products, Amazon, Grainger, Harley Davidson, Hershey Foods, Merck, Cigna, and Sanofi are others with calls this week.

Michael J. Quaranta

President

Delaware State Chamber of Commerce

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