Gain Without Pain?

December 2023 Economic Update

December 13, 2023


From the Desk of Public Trust Advisors, LLC

Since the start of the Federal Reserve’s historically aggressive rate hiking cycle in March of 2022, the critical question has been whether this would tip the U.S. economy into a recession with rampant unemployment or whether a so-called “soft landing” could be feasible. Federal Reserve Chairman Jerome Powell even noted at an August press conference that he was convinced their policies to tame inflation would “bring some pain to households and businesses” but were necessary to restabilize the U.S. economy.   

However, November’s CPI and unemployment data paint a much rosier picture for the U.S. economy than what was predicted at the start of the hiking cycle. Inflation now sits just 1.00% above the Fed’s stated target at 3.10%, down meaningfully from when the Fed began tightening and well ahead of policymakers’ estimates from September. Simultaneously, unemployment rates have remained relatively unchanged since the start of the hikes and decreased 0.2% month-over-month in November. With the data looking increasingly favorable on both sides, it appears that the Fed’s desired but once thought impossible outcome of a soft-landing scenario is becoming increasingly likely.   

While the Fed is far from declaring victory, officials are now calling for unemployment to “remain roughly flat” over the next few years, a dramatic change of tune from when economists called for a full-scale recession at the start of the cycle. However, the outcome of a soft landing is all but guaranteed. Several economists still forecast a sharp increase in unemployment, leading to severe recession and rate cuts as early as March of 2024. As we enter what appears to be the last leg of the Fed’s fight against inflation, the exact timing of a pivot to lower rates will be a monumental decision for the Fed, with severe implications for the U.S. economy and the financial markets.   

Current Economic Releases

GDP QoQQ3 ’235.20%
US UnemploymentNov ’233.70%
ISM ManufacturingNov ’2346.7
PPI YoYNov ’230.90%
CPI YoYNov ’233.10%
Fed Funds TargetDec 13, 20235.25% – 5.50%

Treasury Yields

30-Year4.175% 4.762%-0.587%

Agency Yields


Commercial Paper (A1/P1)



Source: Bloomberg. Data as of December 13, 2023. Data unaudited. Many factors affect performance including changes in market conditions and interest rates and in response to other economic, political, or financial developments. Investment involves risk including the possible loss of principal. No assurance can be given that the performance objectives of a given strategy will be achieved. All comments and discussions presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information presented should not be used in making any investment decisions. This material is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

Previous Monthly Reports

To Hike or Not To Hike.

With measures of inflation remaining stubbornly above its 2% target, the Federal Open Market Committee (FOMC) continued its fight against inflation with another rate hike at its July meeting…

More Work to be Done.

As we enter the second half of the year, stubbornly persistent core inflation and surprising economic resilience remain major themes to the U.S. economic outlook.

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