2023 is only halfway over, and we’ve already seen many ups and downs in the markets and the economy. Banks collapsed, the bull market returned, the inflation rate fell and student loan forgiveness was struck down – and there’s still half the year to go.
Let’s take a more in-depth look at the year so far, and what might be coming up before 2024.
2023 Mid-Year Recap: Markets Rebounding
U.S. stocks started 2023 strong, ending January with its strongest yearly start since 2019. The S&P 500 continued to rebound, and was up 15.8 percent through mid-June. By July, it reached a 20 percent gain from the previous low, which meant we officially entered a bull market.
Interestingly, one of the strongest stock performers this year have been tech stocks. 2022 was a down year for tech, but thanks to a surge of interest in AI, tech stocks have also been rebounding. In fact, the tech-heavy Nasdaq has risen 30.8 percent through June.
Global equities, developed international stocks, and the emerging markets index have also all increased.
So while there is good news, if earning reports, interest rates and economic markers don’t meet investor expectations throughout the rest of this year, it’s possible we could see the markets take a hit. However, that’s true for any year. The markets are always unpredictable. So keep an eye on performance, but don’t forget how quickly things can change.
2023 Mid-Year Recap: Inflation and Interest Rates
The inflation rate has fallen this year, from about 6.4 percent in January to 3 percent in July. For reference, the rate was at 8.5 percent in July of 2022. This is good news, because it means we are getting much closer to a typical inflation rate. However, the Federal Reserve’s goal for the inflation rate is 2 percent, so we may see additional interest rate hikes until we hit that point.
Speaking of interest rates, policymakers raised rates again a quarter of a point in July, making the target rate range between 5.25 percent and 5.5 percent. There is still some uncertainty about whether rates will increase again when the Fed meets in September.
With all that being said, if it still feels like prices are steep, it’s because they are. For example, the cost of bread is up 11.5 percent from last year, cookies are up 8.8 percent, and frozen vegetables went up a steep 17 percent in June of this year.
Additionally, home prices continue to hit near record highs, and when you pair that with very high mortgage rates and low inventory, it’s a tough time to be a buyer. So while the cost of some things have started to come down, Americans are still feeling the squeeze on their finances while certain costs are slow to fall.
2023 Mid-Year Recap: Jobs Market Growing
Even as we’ve dealt with high inflation, massive consumer debt and a turbulent stock market, the jobs market has remained steady. The unemployment rate is at a historic low of 3.4 percent, and women have returned to the workforce in droves after the pandemic, reaching a historic high of 77.8 percent.
The U.S. added 209,000 jobs in June, which shows that hiring is cooling off. This isn’t necessarily a bad thing; it shows that the interest rate increases are working, and spending in slowing, which helps to bring down the inflation rate. z
But at the same time, some companies – including Amazon, CVS and Morgan Stanely – have started laying off thousands of workers. There are a lot of mixed messages in the current jobs market, and it is possible we will see more layoffs as the year goes on.
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