Author: Paul Davidson, USA TODAY

Inflation is hurting lower-income households most as food and housing costs surge. That reverses a pattern that hit middle-income Americans hardest.

As recession fears mounted and labor shortages eased, year-end bonuses got smaller in late 2022.

Inflation slowed again in December as sharply falling gas prices and more moderate food cost increases offset sharp rent hikes, the index report shows

If recession hits in 2023, unemployment will rise, jobs will be lost, consumer spending will fall. But it won’t be as bad as the last two downturns.

Job growth has stayed surprisingly strong but there are signs of a slowdown. For the December report, out Friday, economists see gains of 200K.

A recession warning sign has been flashing red. RV sales have weakened dramatically in recent months, possibly indicating a downturn.

The key to avoiding a recession next year? Slowing strong wage growth, which would reduce inflation, economists say. But it won’t be easy.

Minimum wage is set to rise in 23 states, 41 localities as more places embrace $15 an hour. The hikes will help low-paid workers cope with inflation.

The Fed estimates it will raise the key interest rate to 5.1% in 2023 to curb inflation, more than it previously projected. Economists are skeptical.

Inflation slowed to 7.1% in November as falling gas prices were offset by rising food, rent costs. It’s the smallest annual increase since late 2021.