Following an upward revision to third quarter 2022 real gross domestic product (GDP) and stronger-than-expected incoming personal consumption data to begin the fourth quarter, the economy is now expected to eke out positive growth of 0.4 percent in 2022 before entering a modest recession in the new year, according to the December 2022 commentary from the Fannie Mae Economic and Strategic Research Group.

The ESR Group views the current rate of personal consumption growth as unsustainable given the combination of a low personal saving rate and an elevated ratio of consumer debt to personal disposable income. With many cyclical indicators continuing to point toward economic contraction, including an inverted yield curve, the ESR Group forecasts 2023 GDP growth to be negative 0.5 percent, an improvement from last month’s forecast of negative 0.6 percent; the ESR Group then expects the economy to begin expanding again at a 2.2 percent annual growth rate in 2024.

Inflation, as measure...