2023’s Economic Outlook



Harrison Bagga, Print Staff Writer

The economy affects people on all levels of society. Unfortunately, 2023 poses a bleak economic outlook. The Federal Reserve is a government agency responsible for two specific jobs: stabilizing our currency and minimizing unemployment. On December 15th, they hiked interest rates to 4.5%, from 0.25% the previous year. Freshman Connor Lemole noted, “the lending market is pretty hostile!” Banks have tightened lending standards, affecting many consumers. 

A recession affects people based on their income, portfolios, assets, and various other financial factors. High inflation rates, which refers to an increase in prices and decreased purchasing power for most consumers, directly corresponds with a recession. Inflation rates are currently at 6.5%, and subsequently basic necessities are costing people more than they are used to. According to USDA.gov, a gallon of conventional milk in Jan of 2022 was $5.19 and this year in January that same gallon is about $5.44. As Mr. Brewer noted, “It is important to point out that [the interest rate spike in price of a bushel of wheat] was entirely intentional in order to get inflation under control. The Federal Reserve is balancing the risks of a short-term slowdown versus a longer-term deeper slowdown.” In reality, this may seem counterintuitive; however, the Fed is aiming to prevent an even more detrimental recession. 

A recession causes consumers some degree of challenge because their purchasing power has now decreased. Freshman Amber Pancholi stated, “People were already struggling, and this whole situation has made matters a lot more stressful.” In 2022, US News & World Report says that “56% of Americans say that rising prices caused hardships for their families.” It especially hurts people whose portfolios are not armed with adequate tools. Mr. Brewer adds that, “those at the lower end of the economic scale will suffer the most in an [economic] downturn, for the simple reason that they have less ‘cushion’ in the form of savings and emergency protections.” Nevertheless, The Fed does not have the power to solve this prominent problem—rather, it falls in the hands of Congress. For now, the future is uncertain. Mr. Brewer puts it best, advising, “We will all need to tighten our belts a little bit,” for 2023.