It’s hard to know what is going to happen in 2023. There’s been a lot of uncertainty in the last two years, spurred on by the pandemic and economic considerations moving forward. Is a recession coming down the pike? Economists have a lot of theories, so how can you plan when uncertainty is on the horizon? Here’s a look at financial projections and what you can do to protect yourself.
Economic Predictions for 2023
When uncertainty is on the horizon, it can be challenging to consider the coming economic landscape. But economists do have some ideas. The S&P predicts that inflation will slow, but it will take some time to reach central bank targets. They believe mild recessions will impact the U.S. and Europe. However, mortgage rates are likely to remain elevated throughout the year. While the supply chain issues will ease, labor shortages across all sectors will continue in 2023.
How to Plan for a Recession
Since we can’t know precisely how or when a recession will happen, it’s best to prepare finances as if it were inevitable. Some steps you can take include these suggestions from Charles Schwab:
- Stay with your current job and make yourself valuable to avoid a potential layoff
- Pay off your most expensive debt as quickly as possible
- Put aside money in an emergency fund
- If you have investments, don’t let the economy spook you into taking out your money
- Figure out your plan B
Lots of average American families weathered the 2008 recession just fine. They might have tightened the belts and struggled a little, but they figured it out. We can figure it out again.
Buying or Selling a Home Right Now
The impact on the housing market begs the question of what to do about buying or selling a home. Most experts suggest hanging tight. If you purchased a house with a lower interest rate, hold on to that. If you are in the market, it’s okay to wait to see what happens.
But, of course, timing isn’t always perfect, and there could be dozens of reasons you have to buy or sell in 2023. While its often expected home prices will drop in a recession, this isn’t always the case or as dramatic as it was in the past. But experts believe some power is returning to the buyer’s side of the negotiations. And, of course, it’s always best to work with a trusted independent mortgage lender and start the process early.
Lessons from the 2008 Recession
I had hands-on experience during the last recession. It’s part of why I chose to do what I do today. I know this process can be complex, and I’ve weathered the storm in some challenging economic times, so you know that I am here to help you in any available way.