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Recession Risk Debate

December 13, 2022
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Recession Risk Debate

Be it resolved, the risk of a recession in 2023 is overblown.

The holiday season is just around the corner, which brings with it cheer, merriment, and a sense of good will towards all men and women. But for many families, it also brings a good deal of financial strain. And perhaps this year more than any in the last decade, that stress is more acute. The volatility of the global economy over the last three years has reached a fever pitch, with many expecting an even more dire 2023. For the majority of economists and market prognosticators, a recession in 2023 is a foregone conclusion. As inflation has remained stubbornly high, central banks around the globe have rushed to contain the fallout by raising interest rates aggressively.

As money becomes more expensive to borrow, the economy will inevitably contract. Combine that with COVID restrictions in China and the war in Ukraine, and we are in for some choppy seas. For them, the question is not if, but when and how deep. But other economic experts believe that in spite of the turbulence, market fundamentals remain strong. Inflation is abating, central banks are slowly taking their foot off the gas, and 2023 will be a blockbuster year for the global economy. The risk of recession is overblown, and the sky will not in fact fall.

“If you’re looking at Wall Street, I think 2023 is going to look like a recession. If you’re looking at Main Street, I don’t think it will.”

-CHRIS THORNBERG

“We’ll have I think about a 90% chance of a recession next year. You take the fuel out of the engine and it crashes on you.”

-STEVE HANKE

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