2022 proved one of the more challenging years in recent history for investors, with economic uncertainty prolonged by high inflation, subsequent interest rate hikes, equity market volatility, geopolitical tensions, supply chain disruptions, and Russia’s ongoing war in Ukraine, all amidst the backdrop of a global post-pandemic recovery. While many experts believe inflation has peaked and will be lower in 2023, it’s likely not low enough to ward off the Fed, and signals, in part, a weakening economy. Hence the continued debate among major banks about the outlook of a recession, which, if unavoidable, is generally predicted to be shallow, mild, and short-lived. As noted by Northern Trust, “High-frequency readings of consumer spending and business investment are still showing growth, and the current risk of a downturn is low…the window to a soft landing remains open.” On a global level, markets are seeing some positive shifts with China’s recent removal of covid restrictions, which should provide a boost to the Chinese and global economy through 2023, and European markets appear off to a strong start.
