For our very first episode of the New Year, we’re unpacking the rollercoaster ride that was 2022 and what it means for our money in 2023. Here’s your 2022 Economy Wrapped (which is way less fun than Spotify Wrapped): On average, stocks were down by around 22%, bonds down by 15%, and crypto down more than 50%. Inflation was also a killer, with prices for everything up by as much as 9.1% at its peak. In an effort to tamp down prices, the Federal Reserve raised interest rates seven times, which made borrowing far more expensive. A 30-year fixed mortgage that would’ve cost you around 2.65% in 2021 is now hovering around 7%.
So where do we go from here? We’ve all been struggling with how to manage our money, invest, and stay on track for our long-term financial goals. Thankfully, Diane Swonk is here to help us answer our questions. She’s an award-winning economist who’s served as an advisor to the Congressional Budget Office and the National Economic Council. She recently took over the growing economics team at KPMG, a tax and advisory firm, and she was named one of the top 50 most influential economists during the pandemic.
Diane tells us her top financial takeaways from 2022 when it comes to the labor market, the stock market, housing, and inflation. She also digs deep into the Fed’s strategy of raising interest rates and explains why it’s painful, but ultimately necessary — even if the “soft landing” turns into a recession. Listen in to hear her predictions for when that recession might come, and how quickly the economy could bounce back from it.
Diane also shares her secret for remaining calm as an economist who’s covered multiple recessions and countless corporate failures. She credits her experience with dyslexia, her fight with cancer, and her children with teaching her resilience and hope for the future.
Finally, Diane shares her best pieces of advice for protecting your finances in the New Year. Number one? Don’t feel stuck in a bad job because of economic uncertainty.
“Women in particular tend to be too tentative in their willingness to change jobs,” she says. “Even though we’re talking about going into a more difficult time, it is important that people think about the whole picture — about where they’re at and where they want to be — and don’t be afraid to make changes. Yes, you have to hunker down for a little bit, but the recession is not a repeat of what we’ve seen. And the equation for workers is going to continue to give them the upper hand.”
In Mailbag, we hear from a listener who contributes to her boyfriend’s mortgage, but doesn’t share official ownership of his house. She wants to know if their arrangement is a good idea, and how she can protect herself if things go downhill. In Thrive, how to get your finances organized in the New Year.
A few end-of-episode notes:
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