Here are some 2023 predictions for financial markets, the economy and stocks.
I’ve spent the last year and a half being cautious in the wake of the Bubble-Blowing Bull Market that finally ended early in 2022. Following this year of turmoil, the timing may just be right for us to see the economy morph into something healthy for while.
That would be unexpected in a world where so many CEOs and analysts are predicting hard times ahead.
Keep in mind that the markets and the economy are not the same. And now, onto some the predictions and commentary.
1. ChatGPT and its AI ilk will spark another leap forward for for worker productivity.
During 2023 we will see the initial blossoming of improved capability and efficiency as people in many walks of life embrace artificial intelligence. This will lead to a gain in productivity over the next three to five years that will rival what spreadsheets, word processors and the internet did over the past 30 years.
Companies will be more efficient and effective in handling their customers, their programming, their legal costs, etc. Economists will be talking about this as an ongoing theme by the end of next year.
Improved productivity will mean a shock to the upside for corporate earnings in 2024, and since the stock market always thinks ahead, AI will help lead a tech rebound in 2023.
2. The U.S. economy will be one of the world’s strongest.
Aren’t we already in a recession? There was a debate a few months ago about whether or not two consecutive negative GDP growth numbers were or were not a recession. Certainly, the tech industry and the real estate industries are in their own recessions.
I expect a decent U.S. economy with flattish corporate earnings in 2023. How’s that for a surprise?
3. The employment depression in tech/software engineering jobs will bottom by the middle of 2023.
During 2024, demand for such talent will be back on the rise.
4. Operating margins will expand.
Margins for Meta Platforms Inc.