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Reflection on 2023, A Year of Twists and Turns

Written by: Trek Investment Committee

As we approach the end of 2023, it’s a fitting time to pause and reflect on a year that may have defied expectations. Initially anticipated to be a year marred by economic downturns and persistent inflationary pressures, 2023 instead unfolded as a period of surprising economic resilience. Despite early predictions of a recession, the economy demonstrated remarkable stability.

The year began amidst widespread speculation and concern over an impending recession. Many market analysts, including those at Ned Davis Research, pointed to a risk of an economic downturn. Yet, as the year unfolded, these fears have largely eased, revealing an economy more robust than many had anticipated.

Chart: The chart illustrates the evolving probability model over the past three and a half years.

A Surprising Turn in the Inflation Narrative

Inflation, a key economic storyline of the year, took a surprising turn. After posing significant challenges for both stocks and bonds in 2022, inflation rates have notably declined in 2023. Beginning the year with a 12-month rolling change of 6.4%, the rate dropped to 3.2% more recently. This reduction has had a noticeable impact on various asset classes, offering some relief to investors. This stability in employment is likely one of the key factors preventing the economy from slipping into recession.

Chart: The stability in employment is likely one of the key factors preventing the economy from slipping into recession.

Employment Trends Prove to be the Silver Lining

Amidst the inflation fluctuations, the employment rate has been a source of stability. Despite a slight uptick in recent times, unemployment rates have remained historically low, contributing to the economy’s resilience against potential recession.1

2024 May be a Year of Cautious Optimism

As 2023 draws to a close, we take a moment to appreciate the resilience shown in avoiding a recession this year. However, between a pivotal presidential election to evolving geopolitical landscapes, to the continual need to keep a watchful eye on inflation and employment trends, it should be recognized that 2024 brings its own unique set of challenges.

The favorable economic winds of 2023 always have the potential to shift so it’s important for investors, particularly those mindful of how recessions could impact their portfolios, to stay informed and vigilant.2


  1. gov, February 3, 2023
  2. S. Dept of Treasury, October 26, 2023

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