Nancy Lazar, the chief global economist at Piper Sandler, has warned that the recession expected to hit in 2023 will be more similar to the volatility experienced in 1973-74 than it is to 2008. She believes people are too focused on a crisis that feels like 2008 and not enough on what could potentially occur over the next few years.
Lazar stated that “the key difference between now and then [2008] is inflation” which was much higher during this period. Inflation affects consumer prices as well as wages, meaning there would be an overall decrease in purchasing power for consumers if we were to experience another economic downturn like those of 1973-74. Additionally, she noted how government policies have changed since then; policymakers have become increasingly aware of how their decisions can affect markets and economies around the world – something they weren’t quite so mindful of back then.
For us all to better prepare ourselves for any potential recessions or market volatilities in 2023 or beyond, it’s important we take into account both past experiences such as those from 1973-74 but also current trends, such as inflation levels and government policies when making our plans accordingly. Only by doing so can we develop a comprehensive understanding of what may potentially impact the economy and our finances, and take steps to protect ourselves.
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