Let’s look ahead to 2023, following the market’s worst year since 2008.
MOLINE, Ill. – Monday, Jan. 2, Mark Grywacheski and Quad Cities Investment Group joined WQAD’s David Bohlman to discuss the stock market and inflation outlook for 2023.
Here is a summary of the 2022 market:
2023 Economic Outlook
Friday was the last day of trading for 2022 as investors were happy to put a difficult year behind them. For the year, the S&P 500 fell 19.4%, the NASDAQ lost 33.1% and the Dow Jones Industrial Average fell 8.8%. It was the worst in the US market since 2008.
Bohlman: As we usher in the New Year, what will you be looking for or tracking for 2023?
Grywacheski: Undoubtedly it is inflation. We must understand that inflation leads to higher inflation. In order for this rate hike to be successful, the Federal Reserve must raise interest rates. But high interest rates make buying things on credit more expensive. This means that consumers will buy fewer goods and services. This means that businesses will spend less on buildings, factories, equipment and technology. All of which could weigh heavily on the US economy and labor market.
Bohlman: Inflation has dropped from 9.1% to 7.1%. What are your thoughts on inflation this year?
Grywacheski: There are many people who say that we will have a rapid decrease in inflation this year. Unfortunately, I disagree with this assessment. The main goal is to see a return to 2% of the inflation rate. Yes, we are seeing some changes in labor shortages and consumer spending issues that have helped increase inflation. But we still have a lot of money added to the economy. This is why I think inflation will remain historically high and above the 2% target level until 2024.
Bohlman: There is obviously a lot of concern about the future of the economy. How do you think the economy will fare in 2023?
Grywacheski: The general consensus on Wall Street is that the economy will reverse in 2023, possibly in the second half of the year. There is debate as to whether it will be a recession or a recession. The reason for this prediction comes back to the effect that rising interest rates will have on consumers, businesses and, ultimately, the economy. We are already starting to see many economic indicators starting to show signs of a recession.
Bohlman: In a recent survey (conducted by Personal Capital), the #1 financial decision for Americans in 2023 is building an emergency fund. What advice do you have to help people achieve that goal?
Grywacheski: This idea would be my main idea because of the recession and the job market we are expecting this year.
- Look really hard to buy big tickets. Is it really necessary or can it be put off for a few years until we get through the expected patch.
- Managing money. Really save your money. Please verify the authenticity of your purchases, credit card statements, and view your purchases. You may be surprised at where your money goes and how much you spend on certain things each month. This will help you manage or reduce your expenses to save money.
Quad Cities Investment Group is a Registered Investment Adviser. This is for informational purposes only. Advisory services are provided only to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or unlicensed. Past performance is no guarantee of future performance. Investing involves risk and the loss of capital. No advice can be given by Quad Cities Investment Group unless there is a client agreement.
Watch more news, weather and sports on the News 8 YouTube channel