2023 Year-End Issue: Chief Economists’ Blog Bonanza | Top 5 Essential Economics Posts

Welcome to the final 2023 edition of Essential Economics! This week, we pick the brains of our five S&P Global Ratings Chief Economists to get their views on what they learned this year and what they are watching in 2024.

·        Global Chief Economist Paul Gruenwald: Labor Market Resilience (2023) & Monetary Policy Transmission (2024)

·        EMEA Chief Economist Sylvain Broyer: The ECB Changes Camps (2023) & The Labor Market's Bet (2024)

·        APAC Chief Economist Louis Kuijs: China’s Weak Recovery (2023) & Supply Chain Adjustment (2024)

·        US Chief Economist Satyam Panday: Outperformed Expectations (2023) & Resiliency Test (2024)

·        Emerging Markets Chief Economist Elijah Oliveros-Rosen: Domestic Demand Perseverance (2023) & Reaction Function To The Fed (2024).

We also share our five most popular Essential Economics issues of the year which, IMHO, demonstrate that when market turbulence or big events happen, our numbers go up!

Finally, we wish everyone a safe and happy holiday season – we’re back on January 12, 2024.

Gruenwald: Labor Market Resilience (2023), Monetary Policy Transmission (2024)

My biggest surprise in 2023 was the resilience of labor markets. Following policy rate rises of 400-500 basis points by major central banks, we expected labor demand to slow measurably. But owing to strong spending on services and labor hoarding, employment was surprisingly robust.

Next year, I will be paying close attention to potentially uneven monetary policy transmission.

To read my blog, click here.

Broyer: The ECB Changes Camps (2023), The Labor Market's Bet (2024)

Sylvain’s surprise in 2023 was neither growth nor inflation: the surprise was the ECB. Twelve months ago, we thought that the ECB would stop raising rates before Spring was out, and that its Deposit Facility Rate would not exceed 2.75%. In reality, the ECB raised rates right up to the end of Summer, reaching 4.00%.

 Next year, Sylvain will be watching the direction of the labor market which will be a key factor in terms of growth, inflation, and the stance of monetary policy.

To read Sylvain’s blog, click here.

Kuijs: China’s Weak Recovery (2023), Supply Chain Adjustment (2024)

Louis observes that while China relaxed its Covid policies, the economy initially bounced back but that didn’t last into 2023. The property sector downturn remained a drag on confidence and consumption despite the late 2022 policy U-turn on financial restrictions towards developers.

 Next year, Louis will be watching the evolution of exports and FDI in Asia closely, as it will inform both our short and long-term outlook for the Asian economies.

To read Louis’s blog, click here.

Panday: Outperformed Expectations (2023), Resiliency Test (2024)

For Satyam, the outperformance of the US – which is on track to record 2.6% growth this year – is the biggest surprise.  He notes that the unusual features of the current cycle on both demand-side and supply-side help explain why the US economy performed much better than we had feared 12 months ago.

According to Satyam, the ongoing resiliency will be tested going forward, as real interest rates stay relatively high in the coming year.

To read Satyam’s blog, click here.

Oliveros-Rosen: Domestic Demand Perseverance (2023), Reaction Function To The Fed (2024)

Elijah was surprised by the strength of domestic demand in most emerging markets. His takeaway: the lags of monetary policy transmission in EMs can be particularly long, and their impact on domestic demand is smaller than in advanced economies due to lower levels of financial intermediation.

Next year, Elijah is watching how central banks manage potential swings in market expectations for interest rates, given the impact that market expectations typically have on financial conditions.

To read Elijah’s blog, click here.

Top 5 Essential Economics Posts of 2023

Performance stats are important, and we do track them at EE! The list below contains our top 5 newsletters in 2023 measured by impressions. My takeaways: when a market moving event happens (SVB), our quarterly views are published (Credit Conditions) or important global gatherings take place (Davos, IMF/World Bank Annual Meetings), our readers tune in.

1.      SVB Fallout Macro Impact | Unrealized Bank Losses | Fed’s Plan For US Banks | China’s Rebalancing and Openness | EM Monthly | Corporate Defaults (March 17, 2023)

2.      Special Issue: 2023 Q2 Credit Conditions (March 31, 2023)

3.      Cheung at Davos | China’s Rebound | US Real Time Data | Eurozone Marginal Wages | EM Monthly | Growth and Climate Change (January 20, 2023)

4.      Live From Marrakech | Economists in the Media | US Auto Sector Macro Impacts | Supra-Nationals Review | Blockchain: Trust In A Trustless System (October 13, 2023)

5.      Asian Central Banks and Inflation | China’s City Property Go-Slow | Saudi Debt Market Takeoff | What’s Coming Soon | Sheard: The Power of Money (June 20, 2023).

Happy Holidays!

Thanks to all of our subscribers and supporters for making 2023 another successful year for Essential Economics. Here is wishing everyone a safe and happy holiday season – we’re back on January 12, 2024. Last but not least, a huge shout out to Orla O’Brien and Camille McManus (aka “Team EE”) for helping me put together our newsletter every week: I could not do it without you!