2022 was beset by numerous challenges: a multi-decade spike in inflation, higher energy costs, unprecedented labor shortages, and a war in the heart of Europe. The Federal Reserve embarked on the most aggressive rate-hiking cycle since the late 70s. 2023 had its own share of woes, starting with a banking panic that claimed three mid-size banks whose combined assets were bigger than those of the failed banks during the 2007-2008 financial crisis. 

The economy is sending contradictory signals: economic activity is slowing, but the labor market is the strongest in ten decades; consumer sentiment has cratered, yet spending is holding up; the stock market has performed well, but long-term yields are at the highest level in 16 years. The hope is that the Fed will be able to engineer a “soft-landing,” cooling off inflation without throttling growth. Will it succeed? Will the economy manage to avoid a recession? Will growth continue? Will inflation recede?