As we move into 2023, the state of the economy remains highly uncertain following a volatile year that included both strong job growth and persistent inflation. Unfortunately, our economic models don’t bear particularly glad tidings for the new year, as we expect the U.S. economy will enter a recession in the second half of 2023 or early 2024. What is more, the economic pain caused by this downturn will be felt unevenly across the country: Our work in the American Growth Project has revealed significant divergence across regional economies in the United States that is too often left out of analysis focusing on national statistics alone.
The good news is that we expect the anticipated recession to be relatively mild. When projecting 2023 economic activity for the 50 largest Extended Met-ropolitan Areas in the U.S., more than half of these cities are expected to have positive GDP growth. As a result, U.S. growth may still remain positive for the year, depending on when the recession actually hits.