Is 2023 More Doom And Gloom For The World Markets?

2023 is finally here and I bet many couldn't wait for the dreaded 2022 to be over. From a large scale war in Ukraine, trade wars, super powers starting to go head to head, recession is here and inflation is still sky high. Will 2023 be the turn around year?

Let's take a look at some of the data...

Interest Rates

Interest rates are starting to become a hot topic. Yes you can earn a decent amount by placing your money in savings again but looking to get a load to buy a house or a car you're going to be paying rates we haven't seen since the early 2000's.

The biggest issue with this is home prices have skyrocketed while wages have no where near kept up. This has created an even larger division between the haves and have nots and is most likely why we will continue to see renting become larger and larger.

In early 2000's you're family home would have ran you around $160,000 at a 8% would have ran you $12,800 in interest. Fast forward just 20 years with crazy inflation and a bunch of other junk going on and your normal house price now at $450,000 you'll be looking at a massive $36,000! Not sure about you but for many and I'm talking a good chunk of the population there is no way this is affordable anymore.

Unemployment

While numbers are coming out of a low unemployment what's not seen is that many of these cases are people who lost their jobs during lockdowns, collected unemployment and collected a bit more when it was extended but now have fallen off and still don't have a job. In fact full-time employees in the US are still well below pre lockdowns and mass layoffs are kicking in!

The real kicker is unemployment is often not seen until the end or after the recession has taken hold. That very well could mean the current mass layoffs happening now could possibly be the end of the recession but many including myself now feel that's going to hammer hard here in 2023. This is primarily because of rising interest rates that the FED continues to hammer us with to try and curb inflation which is most likely inflated for other reasons outside of the control of FED rate hikes.

Housing / Real-estate

The USA has a vast amount of money and taxable income from the sale of homes. Over the last few months we have seen prices drastically dropping and with that lower and lower demand (mainly because of the things above which are looking like they are only going to get worse this year)

What we most likely will see is increasing inventory of houses and with that a normalizing of mortgage rates which many speculate will fall around the 6% mark which is not bad in comparison to where they where 20 years ago or before then where getting a loan with 13% was normal.

I stated above that rentals most likely would continue however something unique is happening at the moment. Currently rentals are falling drastically and with that it's suspected that kids are actully moving back in with parents and others are taking on roommates to save costs.

We also see that rent is no longer going up or if it is it's a small amount. We also see that a bunch of renting housing is going up on the market this year so we should see falling prices on rentals and perhaps open up the doors for buying homes again at more reasonable prices.

The other two factors to watch will be time on the market for home listings which has been steadily increase and falling home prices. This is opening up the gateway again slowly to where buyers are more in control and have more power then the seller.

Final Thoughts

All of this data shows us a slowly economy which was the case before lock downs. We are simply now returning to that and it's expected to keep slowly. While it most likely wont be as drastic as the last few years in terms of ups and downs what we should see is a slow decline in housing and rental prices, higher job losses, less disposable income to buy things leading to more layoffs etc. This downward trend is most likely slated to last at least 6 months but more reasonable would be 12-24 months before we start to even barely see a uptick again.

Of course like in the past wars, trade wars, tech and more often are factors that can reset this downturn and it feels the world is quickly heating up to those levels again.

Posted Using LeoFinance ^Beta