Inflation, interest rates and recession will dominate the US economic story in the first quarter of 2023, the second and third a time of recovery and more accommodative monetary policy and the fourth, a new easing cycle, according to the Fed or when the Fed, according to Triple-I’s chief economist and data scientist. marks the beginning. Dr. Michael Leonard.
“We forecast the US economy will grow from 2.6 percent in 2022 to 3.2 percent in 2023,” Leonard says. The US Consumer Price Index (CPI) ended 2023 at 6.5 percent year-over-year, up from 9.1 percent in June. “Triple-I expects inflation to decline throughout 2023, although not flatly from one quarter to the next. The pace and magnitude of any inflation slowdown foreshadows improvements in global geopolitical risk.
B&C underlying growth, which has been below overall GDP since the start of the pandemic, is likely to grow at a faster pace than the rest of the U.S. economy for the rest of the year.
“We remain cautious and forecast insurance base growth to be 3 percent in 2023, up from 2 percent in 2022,” Leonard says. “We forecast P&C replacement costs to increase between 4.5 percent and 6.5 percent in 2023. P&C replacement costs have increased an average of 25 percent since the start of the Covid-19 pandemic in 2020.”
Although Triple-I expects economic fundamentals to improve throughout 2023, tax-specific underwriting considerations will continue to dampen performance, Leonard says.
Triple-I members can access Triple-I’s Economic Dashboard, which is available at the company Members only website. Current updates of the dashboard allow insurance professionals to follow key economic reports (eg, federal government updates on interest rates, unemployment and housing trends) in real-time, adjust forecasts and readjust strategy. Each quarter, Triple-Eye’s Outlook provides a roadmap of which key economic reports will most impact the performance of the insurance industry.
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