by Michael Snyder
January 03, 2023
Let's Hope that
the Irrational Optimists
will be 100 Percent Correct
I hope that I am wrong about our immediate economic future, and I
hope that all of the other respected voices that are warning of
economic doom in 2023 are wrong too.
It would be wonderful if
things turn in a positive direction at some point during the next 12
months and 2023 turns out to be a year of peace and prosperity for
the entire world.
Of course virtually nobody is expecting the year
to start well.
As I discussed
yesterday, there is a growing consensus among the "experts" that
the months ahead will be quite rough.
But even though it
has become exceedingly obvious that short-term economic conditions
will not be good, some optimists are still trying to put a positive
spin on things.
Moody's Analytics chief economist Mark Zandi is trying to
convince us that we will only have to endure a "slowcession"
before things finally turn around...
investors and consumers are worried about a recession in 2023.
Analytics says the more likely scenario is a "slowcession,"
where growth grinds to a near halt but a full economic downturn
is narrowly avoided.
almost any scenario, the economy is set to have a difficult
2023," Moody's Analytics chief economist Mark Zandi wrote in
a report on Tuesday.
inflation is quickly moderating, and the economy's
fundamentals are sound.
With a bit
of luck and some reasonably deft policymaking by the FED,
the economy should avoid an outright downturn."
Let's hope that he
is right on target.
And if he does turn
out to be correct, let's hold a big celebration next December
celebrating what a wonderful year 2023 was.
I would be up for
But I don't think
that is the way that things will play out.
Even now, all of
are starting to burst all around us and the chaos that we have
witnessed in the financial markets is unlike anything that we have
economy" that we had been enjoying for such a long time was
dependent on a very rapidly growing money supply, but thanks to
the FED the money fountains have now been turned off.
In fact, the growth
of M2 has just turned negative "for
the first time in 28 years"...
growth fell again in November, and this time it turned negative
for the first time in 28 years.
continues a steep downward trend from the unprecedented highs
experienced during much of the past two years.
thirteen months between April 2020 and April 2021, money supply
growth in the United States often climbed above 35 percent year
over year, well above even the "high" levels experienced from
2009 to 2013.
Since then, the
money supply growth has slowed quickly, and we're now seeing the
first time the money supply has actually contracted since the
The last time
the year-over-year change in the money supply slipped into
negative territory was in November of 1994.
At some point,
economic conditions will force the FED to reverse course.
But for now FED
officials remain deeply afraid of inflation, and so we will remain
on the current path.
What this means is
that the early portions of 2023 are likely to look a lot like late
2008 and early 2009.
We have already started to see a very alarming
wave of layoffs, and this has particularly been true
in the tech industry...
companies are embarking on a layoff spree the likes of which not
seen since the pandemic, a new report has revealed - laying off
more than 150,000 workers within the course of a year.
numbers were laid bare in a recently released analysis from
Layoffs.fyi, which tracks firings in real time through
information gleaned in media and company releases.
means, the firm found that the technology sector - which had
been largely spared in 2020 amid the mass wave of firings when
Covid-19 first surfaced - are now among those with the largest
numbers of job cuts, with rates increasingly rapidly over the
past few months.
Sadly, it is likely
that there will be even more tech layoffs in the months ahead.
In fact, one expert
is ominously warning that we will see "a
continued cutting of heads in Big Tech because they're getting ready
for the Category 5 storm" that is rapidly approaching...
Securities managing director Dan Ives shared a similar
sentiment about the 2023 economy on "Mornings with Maria"
Tuesday, cautioning that Big Tech companies still need to "rip
the Band-Aid off" in terms of layoffs as a "Category 5 storm"
threatens the macroeconomic landscape.
"Look, a lot of
Big Tech, they were spending money like 1980s rockstars. And I
think that really shows," Ives explained.
were increasing 15, 20% per year. I still think it's a 'rip the
Band-Aid off,' still some more headcount cuts. We think
potentially another 8 to 10% headcount cuts in Big Tech.
look at what happened with Meta, and that's a good example.
finally read the room, cut in terms of what he needed to, stock
I think, be that as a catalyst, I think you
will see a continued cutting of heads in Big Tech because
they're getting ready for the Category 5 storm in terms of what
we're seeing with the macro."
I don't like the
sound of that.
Could we really
see a "Category 5" economic storm in 2023?
Yes, we could...
But once again,
let's hope that the irrational optimists will be correct and that
such a storm can be avoided 'somehow'...
Ultimately, many of
the irrational optimists are entirely convinced that there is
nothing fundamentally wrong with our system and that just a few
minor adjustments are all that is needed to get us back on the road
to endless prosperity.
On the other hand,
people like me that are entirely convinced that our system is
fundamentally unsound and that it is inevitable that the entire
Ponzi scheme will eventually come crashing down all around us.
Americans tend to be quite optimistic about the coming year, but
this year is different.
According to a
Gallup survey that was just released, approximately 80 percent of
U.S. adults believe that "2023
will be a year of economic difficulty"...
opposing outcomes on each issue, about eight in 10 U.S. adults
think 2023 will be a year of economic difficulty with higher
rather than lower taxes and a growing rather than shrinking
More than six
in 10 think prices will rise at a high rate and the stock market
will fall in the year ahead, both of which happened in 2022.
just over half of Americans predict that unemployment will
increase in 2023, an economic problem the U.S. was spared in
But maybe 2023
won't be so bad after all.
Maybe our leaders
will be able to find a way to re-inflate all of the old bubbles one
We better hope that
they have one final miracle up their sleeves, because the
alternative will not be pleasant at all.