Plain English with Derek Thompson The 2023 Economy FAQ: Is Recession Inevitable? Will Housing Crash? Can Tech Recover?
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Jan 4, 2023 Michael Batnick and Ben Carlson, co-hosts of the Animal Spirits podcast and contributors at Ritholtz Wealth Management, dive into the chaos of the 2022 economy and lay out predictions for 2023. They explore the tumultuous tech sector, discuss the looming possibility of a recession, and analyze how rising mortgage rates might impact the housing market, projecting a potential 10% drop in home prices. With insights on shifting consumer behavior post-COVID and cautious optimism regarding the labor market, they tackle where the economy might head next.
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False Narratives of 2022
- Many economic narratives from late 2021 and early 2022 proved false in 2022.
- These included ideas like profitless innovation, low inflation, and the metaverse's significance.
2022's Inflation and Investment Strategy
- Knowing 2022's high inflation would've made investment decisions easy.
- Shorting long-duration stocks and bonds would have been the optimal strategy.
The Fed's 2022 Focus: Inflation over Stocks
- The Fed prioritized fighting inflation over stock market stability in 2022.
- This contradicted the prior belief that the Fed always protects the stock market.