This week’s theme on the Retirement Quick Tips Podcast is: 2023 So far…I’m recapping what happened in the economy and markets in the first quarter of 2023 and looking ahead to the rest of the year

Today…I’m talking about the economic outlook for the rest of the year:

The Conference Board forecasts that “economic weakness will intensify and spread more widely throughout the US economy over the coming months, leading to a recession starting in mid-2023”. We agree with this forecast, believing that a significant economic slowdown is underway, and we will likely see a recession later this year.

The Fed still has more work to do in raising rates to bring down inflation, and that won’t be without economic pain. Consumers and businesses have been surprisingly resilient to higher inflation and higher interest rates, but the cracks are starting to appear – a rapidly cooling housing market, corporate layoffs, and higher delinquency rates on credit cards, etc. Treasury yields and an inverted yield curve (where shorter-term rates are higher than longer term rates) also point to an imminent recession. After the Silicon Valley Bank failure, a credit crunch seems inevitable as banks struggle in this rising interest rate environment. 

A recent WSJ article reports: “U.S. banks’ lending capacity will decline by 1% this year because of the fall in the value of many bank stocks as investors reassess the health of midsize banks, the International Monetary Fund said in a report on global financial stability. That reduction in lending is expected to dent U.S. gross domestic product in 2023”

The result will be even slower growth as businesses will find it harder to borrow, grow and expand.

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

    

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