Augustine (Gus) Faucher is senior vice president and chief economist of The PNC Financial Services Group, serving as the principal spokesperson on all economic issues for PNC.

Prior to joining PNC as senior macroeconomist in December 2011, Faucher worked for 10 years at Moody’s Analytics (formerly, where he was a director and senior economist. He was responsible for running the firm’s computer model of the U.S. economy, edited a monthly publication on the U.S. economic outlook, covered fiscal and monetary policy, and analyzed various regional economies. Previously, he worked for six years at the U.S. Treasury Department, and taught at the University of Illinois at Urbana-Champaign. He was named senior vice president in March 2015, deputy chief economist in February 2016, and to his current role in April 2017.

Faucher is frequently cited in international, national, and regional media outlets including The Wall Street Journal and The New York Times. He has appeared on ABC World News, CBS Evening News, NBC Nightly News and Nightly Business Report, and is regularly featured on CNBC, CNN and Fox Business. In addition, he appears regularly on CBS Radio, NPR and Marketplace. 


Webcast Transcript:

Hi, I am Gus Faucher, Chief Economist for the PNC Financial Services Group with the 2023 economic outlook. The US economy continues to recover from the pandemic and the recession that followed in early 2020, but the outlook has worsened for this year. Employment has fully recovered from the pandemic. The US economy lost 22 million jobs in March and April 2020. But since then, job growth has been very strong and employment is now higher than it was before the pandemic. However, the labor market is extremely tight right now. The labor force participation rate, the share of adults who are either working or looking for work is much lower now than it was before the pandemic, which means that many people have dropped out of the labor force, and that is contributing to a tight labor market.

However, for African Americans, the labor force participation rate has essentially returned to its pre-pandemic level, and so African Americans are about as likely to be working or looking for work now as they were before the pandemic.

The unemployment rate has fallen to a 50 year low as of 2022, and is back to its pre-pandemic level. However, the Black unemployment rate remains above that for the overall population and has not quite returned to its pre-pandemic level. And so the labor market conditions for African Americans are slightly worse now than they were before the pandemic in early 2020.

The biggest problem in the United States economy right now is high inflation. Inflation has been very high because of supply chain bottlenecks and strong demand. Many types of inflation are slowing in early 2023, including energy inflation and food inflation. However, core services inflation, the blue line here, that services excluding food and energy services, remains elevated in early 2023. And is a significant problem for the Federal Reserve.

The Fed doesn't want to see inflation get embedded in the economy, and so the Federal Reserve is aggressively raising interest rates. The Fed has been raising both short-term and long-term interest rates in an effort to cool off economic growth in slow inflationary pressures.

We can see that most clearly in the housing market. The 30-year fixed rate mortgage rate has gone from below 3% in late 2021, to close to six and a half percent by early 2023. Not surprisingly, this has made it much more expensive to buy a home, and we've seen sales of existing single family homes fall by about 30% and single family housing starts fall by about 30%.

This is what the Fed is trying to do; raise interest rates in an effort to cool off economic growth, particularly in interest rate sensitive industries like housing. Given the big increase in interest rates that the economy has experienced over 2022 and into 2023, the most likely outcome for the US economy in 2023 is a mild recession with real GDP output of goods and services declining by about one percent and the unemployment rate overall increasing from around three and half percent in early 2023, up to above 5% by late 2023 or early 2024.

This will be a more particularly significant problem for Black business owners because they were already facing headwinds from the pandemic. The decline in business earnings for Black business owners was much larger than for the overall population when Covid hit and Black business owners have been slower to recover from the pandemic than business owners of other races. Thank you very much for your time. You can find all of our materials at, and you can follow me on Twitter at @GusFaucherPNC.