Surprising Economic Resilience in 2023

Despite predictions of a recession and pessimism in 2022, the economy in 2023 proved resilient, defying expectations. Economists and analysts were surprised at the lack of economic slowdown despite significant rate hikes and high inflation. Various factors, such as the balance sheets of households and corporations, and the labor market not weakening as anticipated, contributed to this unexpected strength. CEO surveys and sentiment indicators also reflected the initial pessimism. However, the unprecedented nature of the COVID-19 pandemic and the strength of the private credit market attributed to the unconventional economic behavior. The debate continues on how the Federal Reserve's tightening affected the economy compared to other factors like supply chain normalization. While the year showed positive growth, concerns remain about a potential credit crunch and the need for sustainable economic progress.