First Quarter 2023 Review

2022 was a year beset by challenges, led by the Russia-Ukraine war, global supply chain disruptions, high inflation, rising interest rates across much of the developed world, and pronounced economic weakness in Europe and China.

Inflation in the US and around the world was of course a central issue. But the US economy also proved very resilient despite rising prices and other headwinds.

In 2022, GDP grew at an annual rate of +3.2% in Q3 and is expected to reach +4% in Q4, and corporate earnings are estimated to have grown ~5% for the year. The economy also added a stout 4.5 million jobs in 2022, the second best year for job creation dating back to 1940. The defining factor for both equity and fixed income markets, however, was a hawkish Federal Reserve and upward pressure on bond yields, which led to a significant re-rating of most risk assets.