Our midyear 2023 economic and market outlook reflects the house view of Vanguard’s global economics and markets teams as of June 26, 2023.
The themes we highlighted in the Vanguard Economic and Market Outlook for 2023: Beating Back Inflation—persistent inflation, tight labor markets, rising policy interest rates—remain well in play at midyear. Developed-market economies have proved resilient. Labor markets have stayed strong, leading to slower-than-expected disinflation. Wage pressures have moderated but are persistent, especially in the service industries. As a result, central banks have needed to raise monetary policy rates somewhat higher than we had anticipated.
As Joe Davis, Vanguard’s global chief economist, discusses in this video, we foresee continued progress in the fight against inflation, with central banks having to keep interest rates in restrictive territory for longer. With that, we anticipate some economic weakness in the months ahead. But there is a silver lining.