A Gallup poll released this week found that nearly eight in 10 Americans believe 2023 will be a difficult year financially, while 10 in 10 believe 2023 will bring prosperity. No more than two people.
Final figures for 2022 have not been released by the Bureau of Labor Statistics (BLS), but economic fears have arisen as wages have failed to keep up with rising commodity costs in 2022.
Average wages increased by 5.1% from December 2021 to November 2022, according to the BLS. During the same period, the Consumer Price Index rose his 7.1%, indicating that Americans lost purchasing power that year.
The Federal Reserve has raised interest rates throughout 2022, keeping inflation at around 2%. Jerry Nicklesburg, adjunct professor of economics at the UCLA Anderson School of Business and senior economist at UCLA Anderson Forecasts, says whether the Fed continues to raise rates aggressively will determine whether the U.S. economy will weaken. It is said that it depends greatly. .
“We are working on a set of policies for the Federal Reserve and no one knows what they are going to do, including the people making those decisions,” Nicklesberg said.
Nicklesburg said more aggressive rate hikes could trigger a mild recession in mid-2023, but a wait-and-see approach by the Fed would likely avoid a recession. rice field.
“I don’t know what the Fed is going to do, so the feeling is 50/50,” he said. Analytical projects may take time for rate hikes to have an impact.”
JP Morgan also predicts a recession is likely in 2023. However, the likelihood of the US entering a recession is far from certain.
While many average Americans felt the pain of the 2008-2009 recession, this recession could be different. During that recession, the unemployment rate he exceeded 10%. Economists believe in the workforce The market remains strong, with the unemployment rate hovering around 4% in 2023.
What should I do if I become anxious?
How you should respond to economic uncertainty depends on your financial goals for the year, according to JP Morgan’s head of behavioral science Jeff Kreisler. He said embracing uncertainty is an important step for those feeling economically uncertain to plan for the future.
“The first thing for people to make the right decisions is to accept that it feels strange. Sure, we’ve been there before, but not knowing what’s going on.” “It’s okay to feel this uncertainty and discomfort.”
He says Americans should ask themselves why they’re worried about the state of the economy. He added that knowing what you’re worried about can make it easier to deal with a bad year.
“Think a little bit about your next year, the years ahead, the decades ahead, and the specifics of your plans,” he said. It’s a very different issue if you’re worried about the ups and downs of your life versus if you’re worried because you want to retire at 15 or 20 years.
And with the job market expected to remain strong, Chrysler said looking at various job opportunities will be more of an option in 2023.
“My view is to separate this anxiety about markets and unemployment and what we can’t control individually, control what we can control. We can’t control it as a bank, but instead , you can,” he said. “Maybe it means, ‘I have my resume ready just in case.’ Maybe it means, ‘I’m going to network more for employment.'”
While you may be worried about the economy in the short term, experts say don’t lose sight of your long-term goals. Kreisler said he reminds clients that investing is a long-term game and that volatility will subside in the long run.
Longer term, Nicklesburg said he expects 2024 to be a growth year for the United States.
Developing good financial habits during a downturn can carry over when things prosper, Kreisler said.
