I’ll start this segment with the Axios headline I’ve been pondering. “No One Knows Anything.”
Why? Well, it turns out no one knows what’s coming. The probability of a recession in 2023 is between 45% and 55%, per the authors of a Goldman Sachs’ Investment Strategy Group report released on Jan 13th. You know, a coin flip. Trend-wise, it’s the highest since the predictions started over a decade ago.
The good news is that the group thinks that if a recession does come, it will be mild.
Inflation is coming down, per the data released last week. Price increases are risking at a more moderate pace, and some prices are declining. In the final three months of 2022, core inflation (which excludes food and fuel costs) came in at an annualized 3.1% — higher than the Fed aims for, but not a crisis level. In the second quarter of the year, that number was 7.9%.
There are expected corresponding adjustments from the Fed, expecting to raise interest rates by only a quarter percentage point at the next policy meeting.
Despite personally being obsessed with trends news like this, my recommendation is about focus. Stay focused on your own performance.
I’m self-aware enough to know that the interesting story is about turbulence. The story actually appears to be more about stabilizing to what many economists view as more normal. Free money – that idea of capital being available at nearly no cost – is not “normal,” even though it’s been the state of affairs for a considerable time. The exceptionally low rates were the exception, not the norm.