Happy New Year! We’ve finally closed the book on 2022, so what’s in store for 2023?
It’s likely to be more of the same as we start 2023, but there are potentially better times on the horizon. We expect things to improve as the year progresses and we find balance with inflation, monetary policy, and the economy. We anticipate the full–year return for the S&P 500 will be positive, about 6%.
On the inflation front, we see inflation falling, but not quite to the Federal Reserve (Fed)’s projection. We expect inflation to be somewhere around 3.5%-3.75% by year end. This will allow the Fed to soon pause its rate hikes.
Whether or not we enter a recession is anyone’s guess. A soft landing is still possible (0.0%-0.5% GDP growth), but we see a roughly equal chance of a mild recession (-0.1% to -0.5%). The consumer and the desire to keep spending will be a deciding factor.
In Washington, narrow majorities in both the House and Senate likely mean only a few “must-do” bills grudgingly pass, such as raising the debt ceiling.
Check out our Outlook 2023: Finding Balance report or video to learn more. Game on!