Financial Predictions for 2023

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David Kern and James Lenhoff are giving their predictions for 2023!

Financial Predictions for 2023

Making predictions is a pretty terrible idea, but one of the things that we thought was really interesting is we’ve been talking with clients about the future that we’re facing. There’s a lot of questions out there. And one of the things that we can say with a lot of confidence is there’s going to be something in 2023 that we’re afraid of. There’s always something that scares us that gives us reason to believe that the future is bleak and that things are going to fall apart. For James and David, their guess is that we’re going to have a name for it. Think about the things we’ve named in the past like the fiscal cliff, or the government shutdown, or the taper tantrum.

Recessions

We do believe that the Federal Reserve is probably going to end their tightening cycle at some point in 2023. And this is great news because it would mean that we’ve gotten inflation under control. It’s been tampered down but we also think that might come at a cost. In the words of Fed Chair Jerome Powell it’s likely that the US economy will be mostly sluggish for the next 6 to 12 months, so that means recession. That means that we will see economic growth go negative. We probably have already seen the start of that and we’ll see it continue into 2023. That doesn’t mean the end of the world.

We have seen recessions time and time again. There’s a lot of reason to think that this recession may be somewhat mild. We don’t see the level of layoffs we normally see going into recession. We don’t see people with a lot of joblessness to wrestle with. When they don’t lose their paycheck they don’t change their spending behavior dramatically. They change it on the edges but don’t completely undo our economy. Our expectation is for a relatively mild recession, but that is subject to change without notice.

Cutting Rates

We anticipate and actually predict that the market’s going to go up and it’ll probably go down and it’ll probably go up again – and maybe even go down again! To borrow an analogy from one of our favorite authors, speakers and podcasters, James Lenhoff: The market is like a boy walking up a hill with a yo-yo. That yo-yo goes up and down, and if we look at that yo-yo we’re going to become pretty worried over time, but we have to step back and realize that boy’s walking up a hill, and it’s an upward sloping curve.

Market goes up most of the time. We don’t know where the market will end in 2023 but we do think it’s going to be a pretty volatile year, and it’s going to be volatile for a lot of reasons.

One, we don’t know how quickly the Fed is going to have to start cutting rates after they end their rate hike cycle. We also don’t know how deep the recession’s going to be. So there’s a lot of digesting we’re going to have to do in 2023. I think 2023 is probably going to feel like an election year even though it’s not. We have been pulling election years further and further into the future. We keep talking about election cycles even when they’re a year and a half or two years away. Even though the presidential election isn’t until 2024, it’s going to be a lot of what we talk about in 2023. We will feel that volatility that normally comes in an election year, just a little earlier than normal. Maybe like Christmas in August!

The Reality of Making Predictions

We have some of these predictions that are kind of fun, some of them that are real and we think are probably pretty reasonable to believe, but the truth is that predicting the future is a fool’s errand. And we all know that. What we do trust is that as we walk through whatever 2023 holds we’re walking through it together and we will stay vigilant, paying attention to what’s coming and making sure we are protecting you as best we can without stepping off the plan and causing irreparable harm.

Our tendencies when things get scary is to want to do things that actually don’t make any sense. Our job is to protect you from making those decisions. We don’t know what 2023 holds. We have a couple of good ideas but we’re sure there’ll be some curveballs that we’ll face together.

Please Note: No portion of the video content should be construed by a client or prospective client as a guarantee that he/she will experience the same or a certain level of results or satisfaction if WQC is engaged, or continues to be engaged, to provide investment advisory services, nor an endorsement of WQC by a current or past client.

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