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.
Why do we care?
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.