Goodbye 2022, Welcome to Recession

As 2022 ends, top names of investment banks, institutions such as the IMF that manages the world economy, managers of many financial companies warned that it is possible for the US economy to enter a recession in 2023. The consensus of all is there will be a 'true recession' in 2023 that will cause deeper bear markets.

Inflation has been on a downward trend in the US. At some point, though, even as inflation eases, investors will have to grapple with a slowing economy.??

The savings rate for households is near record low, the outlook for holiday spending is negative, we are in the northern hemisphere winter and home heating costs have risen sharply from last year, labor market is weak.

There are signs that businesses are cutting back, as well. According to news by Barron's, the Institute for Supply Management's November report on manufacturing showed that economic activity in the manufacturing sector contracted last month for the first time since May 2020, when the economy was still in the grips of Covid-19 shutdowns.?The data reflect "companies preparing for future lower output," ISM said in a statement.?

The FED seems to have a lot of trouble in 2023 in terms of employment, which is another area of responsibility. In his speech at the Brookings Institution on November 30, Jerome Powell emphasized that fewer young people are joining the workforce, pointing to a structural problem.

Financial industry giants have warned of potential layoffs and slowing hiring in the financial industry. Layoffs are not limited to the financial sector. Tech firms like Amazon, Meta and Twitter are facing massive layoffs.

Although layoffs now mainly affect white-collar workers, job market conditions for all workers may soon be faced with a slackening.

In a nutshell;

The last phase in the bear markets is everyone throws in the towel. When the end is reached, no one wants to own stocks again. We are still a long way from this dramatic end.

As UMvest, we think that the general perception in the markets is very rosy at the moment. A recession is inevitable in 2023, and even stagflation won't surprise us, as we've said before.

We think that the employment problem next year will take a lot of time from the FED, if not as much as inflation.

When all this comes to the head of the world's largest economy, the first domino will be toppled.

Happy new year!