Forget Resolutions: What’s Your Motto for 2023?
Happy New Year, everyone!
As we embark on the year, I’ve gotten a lot of questions about where I see it headed in terms of residential real estate, stocks and other assets.
Here’s the catch, though: However prescient I may or may not be, it’s all of little consequence if you don’t use the information around you to challenge yourself, grow your knowledge base and find greater satisfaction with your life – this friends, is the basis of success.
Here’s how I’m going to approach things in 2023.
When resolutions don’t work, create your motto instead
How many of us can look back at the last year and point to New Year’s resolutions kept and personal and professional goals achieved?
We may fall short but that’s not a reason to give up. Success is rarely an overnight event; rather, it comes in fits and starts. But instead of creating a list of resolutions that you may have already broken, how about creating a motto for the year that motivates you, allows for space in good and bad times and even makes you laugh? I think we’ll need that: From where I stand, 2023 has all the early indications of another rollercoaster ride at a time when we’d all like to get off for a bit.
Buckle up, it could be a bumpy ride – but it can just as certainly be a creative, ambitious and, I hope, joyous time, too.
Let’s get to it.
Pay attention: mixed signals abound
For several months now, the markets and other markers of the economy have been all over the place, providing little-to-no reassurance that we can map out this potential (or, in my opinion, current) recession. In fact, just about everything that I’d normally consider good news for the economy is kind of a bad thing in this mixed-up crazy world.
Here’s what I mean – first, some of the negatives (which would normally be positive):
Holiday travel was robust, as was spending in restaurants, retail, entertainment, personal services…just about everything. This is typically good news but from an inflationary standpoint, it’s tricky: Until consumers sufficiently pull back on spending, inflation will keep rising.
This week’s employment report showed stronger-than-predicted hiring and a downward tick in unemployment. While high employment is a good thing, of course, I’ve put it in the negative column this week because it’s a predominant factor that the Fed will use to determine whether (and by how much) to raise interest rates this quarter.
While markets in our current high-inflation/high-interest scenario would tend to react negatively to this week’s employment news, instead they seem to be rolling with it, which is yet another indication of just how unpredictable things are now.
Residential real estate, too, is in a weird state. Transactional volume is way down, but prices have stayed surprisingly high in many markets and inventory generally remains fairly well below demand.
Now, some of the positives…which, of course, are negatives…
The strong spending that we saw during the last month or two could have been a “last hurrah” of sorts after several Covid-weary holiday seasons.
Jerome Powell and the Fed team are indicating that more interest-rate hikes are on the horizon and will likely continue through 2023. The current state of the labor market leads me to think that we could see as much as another 100 basis points by the end of the year.
As the year progresses, it’s quite probable that we’ll see the more familiar recession indicators come to light. Tech- and tech-adjacent companies like Amazon, SalesForce and Compass, for example, have announced new rounds of layoffs. While it’s never a good thing for people to lose jobs, from an inflationary standpoint if it points to a slowdown, then in the longer run it could help move this recession along.
Investigate the unexpected
I love picking apart what’s swirling around me and trying to find nuggets of insight that are in opposition to what I’m hearing in the media: That’s where some interesting opportunities could be.
What would that look like?
Potentially, a snap in employment. Possibly a sudden uptick in residential real estate transactional numbers and, finally, reduced sales prices. Energy prices have remained fairly stable and on the lower side, in part because early winter has been milder across Europe and parts of the U.S. (with a few short-term exceptions), so a rapid change in that sector is something to watch.
And, of course, there’s the wildcard that could throw everything: The war that Russia continues to wage on Ukraine. This is the primary variable that causes me anxiety for a whole slew of humanitarian and economic reasons.
Russia’s current actions seem desperate and desperation never makes for good decisions among world leaders. I’m also concerned that this situation could get much worse and the impacts could be far broader than Europe. I don’t say this to be an alarmist, but I also think that it’s easy to overlook this situation’s significance.
Without even touching on the pain of the human toll (which is very real and that I’m not brushing aside, I just want to stay focused on the core of this post), shifts in strategy that could lead to increased involvement by parties outside of Russia and Ukraine would have tremendous impact on and ramifications around the globe.
My motto for 2023
Like most people, there’s a part of me that wants a “no news is good news” year. We’ve been through a lot and it would be welcome in many respects. But I also know that there’s very little that I can actually control around me – really, it boils down to my own thoughts and actions.
Knowing that to be true, I challenge you to let resolutions go and, instead, create a motto that will guide you through this year with excitement, focus and happiness.
For me, although I’ll do my best to enjoy moments of calm and clarity (should they arise), my motto for 2023 will be “Embrace the chaos.”