The Game Isn't Over. Unprecedented actions on the scale that we experienced in 2020-2022 will bring unexpected results in 2023. So, while we never want to ignore a number like the January jobs report, we have to question how much is signal and how much is noise.
Debt Limit Drama. But the real root of the fiscal problem, and our biggest concern, isn’t the debt or the deficits, it’s government overspending...The bottom line is that excessive spending leads to economic ills.
Rearview Mirror OK, Collision Ahead. First, the good news: we estimate that real GDP grew at a solid 2.8% annual rate in the fourth quarter. But you shouldn’t dwell on the solid GDP report that comes out Thursday. Why? Because the report shows what’s going on in the rearview mirror. Meanwhile, there’s an economic collision ahead.
Soft Landing? Our forecast for real GDP growth this year is -0.5%, with inflation remaining above 4%. In other words, a recession with higher inflation – stagflation. That’s what we expect…and it’s not a soft landing.
Not Goldilocks. Not long after Friday’s Employment Report multiple analysts and commentators were calling it a “goldilocks” report, by which they meant it showed that the economy was neither “too hot” nor “too cold,” but instead, “just right.”
The Housing Outlook for 2023. Don’t expect any real recovery in housing until at least late 2023 or early 2024.
Still Unprecedented. What a difference a year makes!
S&P 3,900 – Dow 33,000. Predicting stock values in 2023 is tough. Unprecedented actions during COVID leaves a wide range of possible outcomes.
A Plow Horse with Shin Splints... Look for a recession to start in the second half of 2023, with some possibility of it starting earlier in 2023 and some possibility of a delay until early 2024. Until then, expect mediocre economic growth.
This Rally Shouldn’t Last. It’s that special time of the year...Many pundits are going to make sweeping conclusions about the economy based on these very limited reports.