The Markets and the State of the Economy 2023: A Concise Review
Investing in the current economic climate is challenging. There are a lot of mixed signals from various markets as well as forecasts that are often inaccurate.
Everyone knows it’s important to stay informed and consider both bullish and bearish factors when making investment decisions. That’s why we create our weekly Marketsense newsletter, to help you do just that.
Let’s start with the good news
On the bullish side, US GDP has seen a 2.9% increase in the fourth quarter. Not only that but natural gas futures have fallen below $3 thanks to the mild winter weather. It also looks like Canada will probably put an end to its rate hikes.
Now brace yourself
On the bearish side, consumer debt remains a significant problem in the US. In December, 35% of households relied on credit cards to cover basic expenses, an increase from 21% in April 2021.
In further worrying news, credit card balances have seen a 15% rise from a year earlier, with interest rates on consumer credit cards being 8% higher compared to last year.
Corporate layoffs are still becoming more widespread, affecting several industries beyond tech. And lastly, natural disasters have caused global economic losses of $313 billion in 2022, a whopping 57% higher than the average since 2000.
While the markets are pricing in a 60% chance of rates topping out at 5% and returning slightly by the end of 2023, it is crucial to keep in mind that these forecasts are not always accurate.
As always, it’s essential to do thorough research and seek professional financial advice before making any investment decisions. What we can say is that investing in your future has never been more important given the uncertainty of the current moment.
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