Axios Macro readers are optimistic about the 2023 economy

• The Axios Macro Consensus is that there will be continued overall economic growth, a modest rise in the jobless rate, and lower (but still-elevated) inflation in 2023.
• Respondents see recession odds as a coin flip, not a certainty.

Why it matters: A benign pathway for the economy is more likely if millions of people think things will pretty much be OK.

• If the views of our readers are widespread, a soft-landing for the economy looks quite plausible.

The details: The median survey respondent saw an unemployment rate of 4.4% next year, higher but less than catastrophic joblessness (the rate was 3.7% in November). The standard deviation of the replies, a measure of variance, was 0.8%, meaning a relatively tight clustering.

• The median respondent saw that surge in unemployment occurring against the backdrop of continued gains in payrolls — a median expectation of 225,000 a month. That ain't a recession.
• At 266,000, the standard deviation for payrolls growth was quite high, reflecting individual forecasts that included both catastrophic job losses and outright booms.
• The median forecast was for 1.2% GDP growth (though with another high standard deviation, at 1.05%).

Between the lines: Those numbers amount to more of a soft patch than an outright contraction. That was evident in respondents' consensus recession odds, as well — a median of 50%.

• The standard deviation on recession probability was high — 27%.
• About one in 12 respondent put the odds of a 2023 National Bureau of Economic Research-declared recession at below 10%, while one in ten put those odds over 90%.

On inflation, the consensus forecast was, in effect, that America's inflation situation will be better but not fixed.

• The median respondent saw the Consumer Price Index rising 4.8% in the 12 months ended November 2023 — below recent 7%-plus readings, but still far above pre-pandemic norms and the Federal Reserve's target.
• Only about 3% of entrants projected inflation of 2.5% or lower over the coming year. More people saw inflation over 8% than below 2.5%.

State of play: Respondents' expectations for Fed policy were well-aligned with what officials themselves anticipate.

• The median projection for the December 2023 federal funds rate target was 5%, versus 5.1% in recent central bank forecasts.

• But the variance was high, with an 0.84% standard deviation. And 23% of respondents anticipated lower rates a year from now. None of the Fed officials who entered projections this month anticipated that.

What they're saying: We saved the best question for last in our survey: we asked readers to predict the biggest economic surprise that will unfold next year. The responses ranged from what you expect could happen in financial markets, the labor market and the global economy. Here's a sampling:

• "Lingering strong demand for workers despite unemployment increases." —Dukedog
• "A comprehensive immigration bill that helps address the worker shortage." — BillG.
• "After the market comes slowly back, it will trigger a bigger wave of retirements, putting pressure on worker availability again." — Hank
• "Liquidity implosion in debt markets." — Tom
• "It will be surprisingly bland! We'll have a very mild recession and begin to bounce back by the end of '23." — Lucas Q
• "I would be surprised by a drop off in demand for services, hospitality, and travel. Even if we start feeling the effects of a recession, people have too much pent up demand after almost 3 years of pandemic-constrained activity."— David D.
• "The big surprise is no surprise. Lackluster growth and minimal returns." — Tonedog

And finally, for fun — here's perhaps one of the most amusing responses, courtesy of reader Anonymous Coward: "In a bizarre twist, Alan Greenspan will be unmasked as the real Satoshi Nakamoto, inventor of Bitcoin."