Morning Wire 2023 Outlook: Inflation, Recession & Interest Rates | 1.22.23
Jan 22, 2023
Kenny Polcari, Managing Partner at Kace Capital Advisors, shares his expert insights on the economic outlook for 2023. He delves into the implications of rising interest rates and discusses the Fed's strategies for stability. Polcari highlights the growing concerns around household debt, particularly credit cards, and the potential impact on consumer spending. He also touches on the earnings season, emphasizing key performance indicators for various industries. Additionally, he debates the proposal to eliminate the IRS in favor of a flat tax, exploring its possible effects on the economy.
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2023 Economic Outlook
- The economy might start improving in the second half of 2023, depending on inflation and macroeconomic data.
- The Federal Reserve aims for 2% inflation, but faces challenges in lowering it from the current 5.7%.
The Fed's Role
- The Federal Reserve's goal is price stability and full employment.
- They are raising interest rates to combat inflation, similar to Paul Volcker's actions in the late 70s and early 80s.
Housing Market Pressures
- Rising mortgage rates due to Fed's actions are putting pressure on the housing market.
- Higher rates increase monthly payments, making housing less affordable.