with the us stock market on track for its biggest annual decline in over a decade fears that efforts by the federal reserve and other major central banks to bring down a surge in inflation will spark a major economic slowdown have moved front and center as the calendar flips to 2023 here are three recession scenarios for an economic slowdown and the potential market reaction many analysts think the economy has enough inertia to grow slowly at least through the first half of 2023 to be sure a severe recession would be bearish for stocks yet given the resilience of the us economy and the tight labor market we are expecting a slowdown or shallow and brief recession said nancy tengler ceo and chief investment officer of laffer tengler investments that could allow stocks to rally in the second half of 2023 after a volatile q1 as they look around the recession corner tengler said that the current market consensus is too pessimistic because the consumer still has bandwidth and spending will hold up better than the naysayers predict in the tight labor market us employers hired more workers than expected in november and raised wages shrugging off most worries about a recession the november jobs report showed the economy gained 263000 jobs last month topping wall street expectations with the unemployment rate holding steady at 37 remaining close to a halfcentury low however job growth is expected to slow in 2023 as higher interest rates crimp investment and as more industries fully recover their prepandemic head count but according to julia pollak chief economist at ziprecruiter this kind of substantial cooling in labor market conditions will be far from recessionary the congressional budget offices estimate shows the number of employed americans will rise from 158 million in 2022 to 174 million in 2052 pollak said the economy should be comfortable with even lower numbers of job gains in subsequent years those projections imply net job gains of only 45000 jobs a month on average over the next 30 years absent an increase in us population growth mark luschini chief investment strategist at janney montgomery scott thinks the stock market is likely to bottom ahead of the actual beginning of the recession with an anticipation of the eventual recovery on the other side of it we expect stocks to struggle and continue to be under pressure over the coming months or a quarter or two before ultimately establishing a more sustainable advance perhaps in the second half of next year luschini told marketwatch via phone he attributed the economic resilience to the healthy balance sheets of individuals and households which accumulated abundance of savings during the pandemic see an interestrate shock wrecked stocks in 2022 what pros say will drive the market in 2023 while a slew of forecasters think a recession in 2023 will be mild and brief and will be followed by a strong economic recovery one jp morgan strategist said the economy would likely struggle to get out of it david kelly chief global strategist at jp morgan asset management argued that rather than falling off an economic cliff such a recession would be more like sliding into an economic swamp meaning it would be hard for the economy to bounce out of it the good news is that a prolonged period of economic swampiness should snuff out inflation and force the federal reserve to reverse a significant part of their 2022 monetary tightening wrote kelly in a november note however the flip side is that a mild recession would likely not create much additional pentup demand and assuming we see only a modest increase in unemployment the employment and income boost from a falling unemployment rate would also be less than normal he said perhaps most significantly in contrast to each of the last four recessions there is unlikely to be any significant fiscal stimulus to reenergize the economy wall street analysts have warned stockmarket investors that they should not expect any form of fed put next year see is a 2023 stockmarket rebound in store after 2022 selloff what history says about backtoback losing years economists at goldman sachs have doubled down on their call that the us economy will probably achieve a soft landing meaning the central bank could tame inflation without stunting economic growth they also expect the economy to narrowly avoid a recession as inflation fades and unemployment nudges up slightly our economists say theres a 35 probability that the us tips into recession over the next year an estimate thats well below the median of 65 among forecasters in a wall street journal survey said goldman sachs economists in their 2023 outlook the us may avoid a downturn in part because data on economic activity is nowhere close to recessionary after two consecutive quarters of negative gross domestic product gdp growth in early 2022 the us economy expanded in the third quarter growing at an annual 29 pace government data shows consecutive quarters of contracting gdp are often described as a technical recession though the national bureau of economic research which serves as an arbiter of the business cycle has a much broader definition of recession see these five trading days accounted for nearly all of the sp 500s losses in 2022 us stocks on friday finished the year not far from their 2022 lows as wall street wrapped up its worst year since 2008 on a sour note the sp 500 was down 194 for the year while the dow jones industrial average dropped 88 and the nasdaq composite slumped 331