No one is shedding a tear over the end of 2022. Sharp inflation. Record food price hikes. Highest ever gasoline prices. Worrisome product shortages. Rising interest rates. Steep stock market losses. A porous border. Runaway federal government spending. War in the Ukraine. Good riddance to 2022.
No even Nostradamus could have predicted the gloom of 2022.
When the calendar flipped to 2023, forecasters with short memories are peddling cheery news about everything from the stock market to inflation. Optimists claim the new year will make Americans forget 2022. Not so fast. My occasionally reliable, highly unpredictable crystal ball is blinking red.
1. The country sinks into a recession, as predicted by a majority of economists and large banks. The Gross Domestic Product (GDP) will be negative for at least two straight quarters this year. The Biden Administration will avoid using the "r" word, referring to the crisis as a "temporary retraction."
2. The economy will shed 1.1 million jobs as more major companies in the technology sector and big firms are forced to layoff employees in the face of less consumer spending. First time unemployment claims increase each month. Expect the unemployment rate to climb to 4.5% by year's end.
3. Adding to the economic woes consumer credit card debt and personal loan delinquencies surge in the new year. Consumers have been on a spending binge the last two years seemingly immune to inflationary prices. A consumer retrenchment will negatively impact corporate earnings.
4. After the worse market since 2008, equities managers are clinging to history that shows markets tend not to experience two negative years in a row. Equities bounce around early on before gaining momentum. Stocks finish the year strong with the S&P (+20%) outperforming the NASDQ and Dow.
5. Home sales will reach their lowest point since the 1980's as interest rates make real estate less affordable, especially for first-time buyers. The good news is that the overheated increases in prices will abate except in a few markets where demand for high-end homes flourishes such as Texas and Florida.
6. The Federal Reserve, as promised by Jerome Powell, will continue to raises rates in the new year as inflation persistently refuses to fall lower than 5.8%. Food and energy prices leap higher than the CPI. Eventually, Fed hikes dampen growth, prompting Powell to forego a rate hike in fourth quarter.
7. COVID infection rates soar past 70% in China after the Communist nation abandons its COVID Zero policy. New highly infectious variants develop as the virus rages, killing 1 million Chinese. Chinese travelers spread the virus globally, leading to worldwide outbreaks.
8. The Supreme Courts ends its temporarily halt of Title 42, which allows the expulsion of illegal immigrants under pandemic-era restrictions. The move unleashes a torrent of border crossings, prompting the forced resignation of Alejandro Mayorkas.
9. More fast food restaurants will join the robot revolution as testing by Chipotle, White Castle and others proves diners are satisfied with food prepared by robots. The fast food industry will move quicker to adopt robots and AI as wage increases and the difficulty hiring workers persist.
10. The collapse of FTX Exchange, once a $32 billion enterprise, prods the Securities and Exchange Commission (SEC) to issue regulations for the cryptocurrency industry. As more crypto exchanges and lenders file for bankruptcy, the new rules clamp down on the industry, softening currency demand.
11. The Chinese will not launch an invasion of Taiwan instead increasing menacing militaristic tactics to cower the island. When the U.S. fails to intervene, China finds an excuse to encircle the island with a naval armada. China threatens a blockade unless Taiwan makes concessions.
12. Trying to speculate on Putin's strategy in Ukraine is a fool's pursuit. But the most likely scenario is the European Union will push for a settlement as energy supplies dwindle, sapping economic growth. Ukraine is pressured into a diplomatic solution when EU/US commit billions to rebuild the country.
Print this column and wave in your prognosticator's face at the end of 2023. However, if you have your own predictions you would like to share, I would like to read them. After all, the prediction business is full of people who get it wrong every year. And that has never stopped anyone, including me.
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