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Inflation update.

Inflation data continues to point towards further easing, particularly on goods as customers cut back on the ‘stuff’ they purchase. Consumption of services remains strong. The slowing inflation data is a promising sign that price pressures are abating. The abatement reasons are twofold – resolutions to supply chain kinks and the slowing of spending by consumers. The supply/demand imbalance is beginning to swing back into equilibrium, resulting in continued easing of price pressures.

Earnings projections.

This slowdown in consumer spending and the fear of recession is leading many market prognosticators to lower corporate earnings expectations as we head into 2023. The market has already responded to these lowered projections with a year-end selloff. Earnings will likely be lower in the first half of the coming year as we continue to work our way out of the recent inflationary period.

2023 market outlook.

Expect a weaker first half of 2023 while the Federal Reserve finishes monetary tightening to address inflation. The second half of 2023 should show improvement of market conditions as Fed tightening concludes and peak interest rates are realized. As we head into the new year, don’t hesitate to reach out with any questions or concerns about market trends.