As we approach 2023, please find the following articles from the BTC Capital Investment Team, discussing top economic themes and their potential impact in the New Year.
Walking a Fine Line
The two dominant themes running through the U.S. economy in 2022 have been sluggish GDP growth and elevated inflation. From the growth perspective, this year has been the tale of two halves with the first two quarters seeing negative results for GDP followed by a positive third quarter and what is anticipated to be a continuation of upside growth in the fourth quarter.
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Putting the Income back into Fixed Income
2022 has been a year of transition away from unprecedented quantitative easing where central bankers flooded markets and government coffers with money, to the start of the tightening of the monetary policy belt. This follows the U.S. Federal Reserve’s (Fed) admission that inflation was not transitory, and that all the money pumped into the economy was chasing too few supply chain-limited goods. Focused on taming inflation the Fed turned to an old monetary playbook of the late 70’s from the last time inflation was this high.
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Say Goodbye, 2022
We presume all cannot wait for 2022 to say goodbye. U.S. equities, as measured by the Russell 3000 Index, are currently down 19.8% year-to-date (YTD), which may be its worst calendar-year drawdown since 2008 ( 37.3%). Likewise, the MSCI All-Country World Index, a measure of foreign equities, is down 16.1% YTD, its worst year also surpassed only by 2008 ( 40.6%).
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Source: BTC Capital Management, Bloomberg LP, FactSet, Refinitiv (an LSEG company).
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