We all wish we had a crystal ball so we would know the future, especially when it comes to the economy. While there is no crystal ball, economic trends and historical data exists as well as the basic rules of economics. Based on the current economic trends, the financial predictions I have for 2023 and beyond are as follows:
- Inflation will continue at the current rates of 8% through 2025.
- Unemployment will increase to as high as 10% by the end of 2025.
- Fed overnight interest rates have to reach levels of 6.5% or higher or inflation will continue to rise.
- Increased bank failures.
- Mortgage rates to remain in the 6% to 9% range through 2025.
- Housing, both retail and rental rates, to drop an additional 15% or more national through 2024.
- The stock market will drop 15% or more from the Dec 1, 2022 level by 2025.
This is not a “the sky is falling moment” but rather a correction to the economy to bring back to a stable state. While many changes occurred rapidly with the pandemic, these corrections will occur rapidly as well. Also remember these are national predictions, with local markets being influenced locally and changing these outcomes. Our government, and those of other nations, will step in to try and control the economic impact, which may help short term, but could amplify the impacts.
In the weeks ahead, watch for short articles where we will describe how we came to these predictions, how they may impact you, and what we recommend to protect yourself so you operate with financial efficiency.
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