The Balance Today: News You Need To Know on Jan. 3, 2023

Where’s the Economy Heading This Year?

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Happy New Year! I hope everyone had a wonderful holiday. I know it can be a bit tough restarting everything after a break, but the stage has already been set for 2023 to be a bit of an economic whirlwind. So, it’s best to try and get our bearings sooner than later—what can we expect in the new week and year? 

On Friday, all eyes will be on the government’s December jobs report, which will give us an update on the strength of the U.S. jobs market. Throughout 2022, the labor market remained resilient, indicating a strong economy. You might think this is good news, but think again. The stronger the U.S. economy, the more that the economy could be expected to withstand the shock of higher interest rates handed to us by the Federal Reserve. That makes investors very nervous about whether policymakers might raise rates too high and fast, stoking recession worries. 

Fears that 2023 could be the year that the economy tips into a recession linger. Rising unemployment would be one of the first indicators that we might be headed there. At the end of this month, policymakers at the Federal Reserve will be meeting again (I know—didn’t we just cover this?) and will decide if they raise rates, and by how much. Investors will be paying close attention not just to the first meeting of the year, but the path the central bank might take over the next few months.

Stocks are falling today after steep losses in 2022 as investors start this new year with less optimism. Though stocks took a beating last year—and that trend could continue this year—this could also be a good opportunity to buy equities at a discount.

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Sources
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  1. Yahoo Finance. "World Indices."

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