Third Quarter 2023 Review

For the past year, many economists and major banks have been forecasting a looming economic downturn in the US. It didn’t arrive in the first half of 2023.

The headline risk surrounding bank failures and the debt ceiling standoff made it seem like crisis was just around the corner, but the US economy outperformed at every turn—and stocks rallied. The S&P 500 index officially entered a new bull market with a 20+% bounce off October 2022 lows, with the index rallying +16.9% in the first six months of the new year.

The simple fact is that the US economy has been performing better than expected, which is delaying recession forecasts and also pushing interest rate projections slightly higher. The bright spot looking forward is that monetary policy is already tight, which we think signals that the peak in the interest rate cycle is likely very close – which is good for risk assets looking ahead.