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Market Insider: January 24, 2023

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U.S. Money Reserve

Jan 24, 2023

On January 18, 2022, Amazon began laying off 18,000 employees, the largest mass layoff in the company’s history. Layoffs are among the practices companies are implementing to prepare for an expected recession in 2023.

Companies are enacting layoffs and other cost-cutting measures.

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Microsoft, Teladoc, DirecTV, BlackRock, Goldman Sachs, Salesforce, and other companies have announced layoffs in January 2023 totaling in the thousands. CEOs of these companies cited reasons such as a “challenged economic environment,” an “uncertain economy,” and vulnerability to “macroeconomic downturn.”

Other companies, such as Bank of America, have enacted hiring freezes to prepare for economic volatility, while still other companies, such as FedEx, are cutting capital spending to contend with the risk of a downturn.

Company leaders have definitively stated they expect a recession.

Business person with laptop touching downward red arrow with word "RECESSION"

An annual survey of more than 1,100 executives conducted by The Conference Board found that a majority of executives expect a downturn in early 2023. Dana Peterson, The Conference Board’s chief economist, said, “Just about every region with the exception of China believes there’s going to be some kind of economic downturn…. 98% of CEOs in the U.S. think there is going to be a recession.”

The results of JPMorgan Chase’s 2023 annual Business Leaders Outlook survey released on January 5, 2023, found that 65% of midsize firms and 61% of small businesses anticipate a recession in 2023.

A recession may impact asset prices.

Mike Wilson of Morgan Stanley says stock prices could decline 22% in 2023. In a research note, Wilson outlined that even pessimistic outlooks on corporate profits and economic growth estimates are high, stating, “The consensus could be right directionally, but wrong in terms of magnitude.”

Economist Nouriel Roubini predicts that economic volatility will cause gold prices to rise over the course of the decade. Roubini argued that the precious metal’s utility as a hedge could drive the price to rise to over $3,000/oz. by 2028.

Just as large companies are preparing for a recession, consumers may benefit from examining their portfolios and considering steps that may help protect their wealth in the event of an economic downturn.

Read U.S. Money Reserve’s “Market Insider” each week for more economic insights. Nothing herein should be considered as portfolio or retirement advice as U.S. Money Reserve (“USMR”) cannot and does not offer financial advice. Clients should consult a financial advisor for specific advice. This commentary is provided by USMR for informational purposes only and is provided on an “as is” basis without any warranty of any kind, whether express or implied. Your use of the information provided in this commentary is entirely at your own risk. In no event will USMR be held liable for any indirect, special, incidental, or consequential damages arising out of the use of information contained in this commentary.


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