Moody’s - 2023 Will Be A Tough Year
You probably remember some of the lyrics of the Kenny Rogers hit, “The Gambler”. Kenny was not the first person who recorded the song, but if you asked virtually anyone alive today they would surely credit Kenny Rogers as the person who first brought it to life. (I will come back to this in a moment).
Until very recently, the housing market was so over-heated that virtually any house recently listed was sold quickly, and often for more than the asking price. The housing market has gone into hibernation as interest rates have risen.
Mark Zandi, chief economist of Moody's Analytics, has projected that 2023 "is going to be a fairly rough year" because we won't "see the full impacts of what the Fed's done for far into" the year and because "job growth is going to stall, we might see some dips, and unemployment is going to rise”.
“You just think about these big companies, like the Moody's agency”, Zandi said. “A year or six months ago, everyone was hiring like crazy. Positions open were at all-time highs. Simply said, you don't easily turn that ship around. Therefore, I predict that we will experience considerably more restraint in this area moving forward. We have already experienced some reduction in job growth. And it will require some time. The full impact of the Fed's actions won't be felt until far into the next year”.
“It does feel like the moment of truth here is dead ahead of us on inflation. The Fed’s going to do everything it can to get inflation and they’re going to succeed one way or the other. So, I think 2023 is going to be a pretty tough year”. - Breitbart
Globalization of the U.S. Economy
If you watch the numbers for the investment markets, it would seem our economy doing quite well. Looks are often deceptive.
According to a report from the U.S. International Trade Commission, the globalization of the American economy has had a devastating effect on American cities because free trade makes it simpler for businesses to relocate manufacturing and jobs overseas.
The U.S. Trade Representative Katherine Tai requested the assessment, which was performed in March and April of this year and brought together economists, union representatives, and others to evaluate the effects of the country's long-standing free trade policy.
The investigation discovered, among other things, that American free trade policy has made it easier for businesses to relocate American jobs abroad and keep wages low for employment that stay in the country.
According to the report, American workers are not the only ones who are negatively harmed when firms are given the opportunity to outsource manufacturing due to U.S. free trade policy. The disastrous effects are felt by towns and communities as a whole as well as by Americans working in related industries.
The research identifies a number of social effects that emerge from businesses moving their U.S. production overseas, including an increase in mental health concerns, suicide, a decrease in life expectancy, divorce, domestic violence, higher crime rates, and inferior public schools.
According to the report, the U.S. free trade policy in particular made it difficult for nearby mom-and-pop shops, small enterprises, and grocery stores to remain open when a facility in Beaver County, Pennsylvania, shut down. Many of them ultimately had to close.
Beaver, Pennsylvania
Offshoring is still on the rise as a result of American free trade policies.
For instance, Jabil Inc. officials stated this month that they would be terminating around 1,400 of their American workers in California, and closing six sites throughout the state.
Similar to this, an Avon plant in Suffern, New York, which has been in operation for 125 years, is closing and laying off approximately 140 of its American workers. The employment will be relocated from the United States to Poland and Brazil, where labor costs are far lower, according to Avon executives.
A year from now, we may find our economy rebounding, only after some challenging times for those who are not prepare.
The chorus from “The Gambler” is great advice today. You got to know when to hold ‘em, when to fold ‘em; Know when to walk away, and know when to run.
