WASHINGTON — The U.S. economy held up last year despite soaring interest rates, rising inflation and global turmoil. From employers to consumers, the picture has shown surprising resilience.

This year may turn even more pessimistic. The economy is widely expected to decelerate steadily and slip into a recession sometime this year.

Some early signs could start to emerge on Thursday, when the Commerce Department releases its first estimate of the economy’s performance in the first three months of 2023.

Forecasters forecast gross domestic product — the broadest measure of economic output — growing at an annual rate of 1.9% from January through March, according to a survey by data firm FactSet. That would mark a sharp slowdown from the 3.2% growth rate for the July-September period and the 2.6% growth rate for the October-December period.

The obstacles facing the economy are getting tougher. The biggest of these is a sharp rise in borrowing costs. The Fed raised its benchmark interest rate nine times in just over a year as it battled inflation that hit four decade highs last year.

As these higher interest rates spread across the economy, it has become increasingly expensive for consumers and businesses to borrow and spend. The cost of a loan to buy a house or car or to expand a business can get very expensive.

Many economists say the cumulative impact of the Fed’s rate hikes has yet to be fully felt. Central bank policymakers, however, are aiming for a so-called soft landing: growth cooling enough to curb inflation but not enough to tip the world’s largest economy into recession.

There is widespread skepticism that the Fed will succeed. Economic modeling used by the Conference Board, a business research group, puts the chance of a U.S. recession next year at 99%.

Starting in September 2020, as the economy rebounded explosively from the COVID-19 recession, the Conference Board’s recession probability indicator hovered near zero until March 2022 when the Federal Reserve began raising interest rates to fight inflation.

Higher interest rates have hammered the housing market, which depends on the ability of homebuyers to secure long-term mortgages. Housing investment fell at an annual rate of 27% from July to September and 25% from October to December.

Consumers, who spend about 70% of U.S. economic output, appear to be feeling the chills. Retail sales got off to a strong start in January, helped by warmer-than-expected weather and larger Social Security checks. But in February and March, retail sales fell again.

“The U.S. economy is in bad shape and it’s starting to show,” said Gregory Darko, chief economist at consulting firm Ernst & Young.

Turmoil in the banking sector — the U.S. experienced the second- and third-largest bank failures on record last month — poses another threat. Many lenders are cutting lending to save money in the face of a potential bank run after depositors pulled money out of troubled Silicon Valley Bank and Signature Bank, forcing regulators to shut them down.

The worst fears of a 2008-style financial crisis have eased over the past month. But lingering credit cuts cited in the Fed’s survey of regional economies this month could hamper growth.

“We see a roughly 55%-60% chance of a mild recession in the U.S.,” said Tony Roth, chief investment officer at Wilmington Trust, in a research note. “Recent bank stress has receded, but financial conditions have tightened.” increases these recession risks.

Political risk is also increasing. Republicans in Congress have threatened to push the federal government into default by refusing to raise the legal limit the federal government can borrow if Democrats and President Joe Biden cannot agree on spending limits and cuts. A first-ever default on federal debt would devastate the U.S. Treasury market — the world’s largest — and could spark a global financial crisis.

The global backdrop also looks bleaker. The International Monetary Fund cut its forecast for global economic growth this month, citing rising global interest rates, financial uncertainty and long-term inflation. U.S. exporters could suffer as a result.

Still, the U.S. economy has surprised expectations before. Fears of a recession intensified early last year after two straight quarters of contraction in GDP. But the economy rebounded strongly in the second half of 2022, driven by unexpectedly strong consumer spending.

A strong job market gives Americans the confidence and financial resources to keep shopping: 2021 and 2022 are the two best years on record for job creation. Hiring has remained strong so far this year, despite a slowdown from January to February and then to March.

The government’s employment report for April, due on May 5, is expected to show employers added a decent but still low 185,000 jobs for the month, according to a FactSet survey of forecasters.

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