Barclays raises U.S. first-quarter GDP forecast, expects Fed to cut interest rates by the end of the year

The Barclays research team has raised its forecast for US GDP in the first quarter of 2023 (0% to 0.5%).

Barclays’ new forecast is down from its forecast of 2.0% for the fourth quarter of 2022. Wage growth is likely to fall from an average of 241,000 per month in the fourth quarter to 100,000 per month in the first quarter of 2023.

The Fed is expected to reduce the federal funds rate range to 4.5%-4.75% by the end of 2023 and continue to cut interest rates next year, reaching 3.0%-3.25% by the end of 2024.