After touting a plethora of highly disputed statements in the State of the Union Address last night, President Joe Biden touted a better economy with points on jobs added and gas prices decreasing. While this may be true in a sense, the jobs added included jobs lost during the Covid-19 pandemic, and gas prices were over $9 in some places in the country after he was seated as President.
Of course a new year does usually encourage a fresh start, however top economists are predicting a bear market through the end of 2023. Treasury yield curves have reached a the highest margin of inversion rate in bond yield curve in the last 40 years. This means longer maturing bonds are not bringing as much of a return as short-term bonds.
According to an article written in July of 2022 by the Department of the Treasury, they were noted to write, “As of the most recent revision, U.S. real GDP fell 1.6 percent (annualized rate) in the first quarter of 2021 despite adding 1.7 million jobs. Taken at face value, this suggests a sharp decline in labor productivity – where U.S. corporations and firms produced less goods and services despite having more Americans working.”
If this trend continues, in 2023 we will be looking at the same through the end of the year, a bear market. Being that China’s production is outpacing the US in many ways, this will likely lead to China’s stocks outpacing the United States.
Interest on our national debt alone has reached 8 trillion dollars. The border crisis has reached an all time high in recent months, with over 2.76 Million in the fiscal year of 2022. Now, couple that with the cost of energy and goods, high interest on credit cards, car loans and increased rates on mortgages. The Central Bank has inferred that it feels comfortable with keeping the rates where they are for now. If this stays true, it’s not a far fetch to say that we will be in recovery mode all the way through this year of 2023.
It’s looking as though we very well may experience a recession this year. Who will suffer the most? The poor, and middle class. Usually, we would see the Fed lower rates to assist a negatively stressed economy, however being that the current administration doesn’t seem to think that our economy has issues, it looks like there will not be a huge change from what we are experiencing now. If anything, we will likely see things get worse before they get better.
Many people are now turning to buying Real Estate, digital assets (crypto), as well as converting their portfolios and money market accounts into precious metals such as gold and silver.
Authored by Debra Teal, Seattle Real Estate Broker
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