These forecasts are based on deteriorating structural fundamentals. For example, credit card debt has increased even beyond 2020 levels, with interest rates charged by banks only marginally higher than those observed prior to the post-2000 dot-com crash. And yet, labor force participation rates — or the proportion of the population who are capable and working — have still not recovered to pre-pandemic levels. In addition, inflation – as measured by the consumer price index – has risen sharply in recent years.
Economic forecasts indicate that we are headed for major economic turmoil. The United States is in recession and that recession is expected to continue, with the Conference Board forecasting another 0.5% contraction in gross domestic product (GDP) in the fourth quarter of this year. She also expects the recession to last at least into the second quarter of 2023. That was before the collapse of crypto trading platform FTX, which had a profound downstream impact on investment portfolios and non-crypto businesses. Other more optimistic forecasts, like those from the Federal Reserve Bank of Philadelphia and S&P Global, are just about positive for 2023 at 0.7% and 0.2%, respectively.
Consumer Debt and Interest Rates in the United States, 1995-2020. Source: St Louis Federal Reserve
Labor Force Participation in the United States, 1950-2020. Source: US Bureau of Labor Statistics
Consumer Price Index, 2011-2022. Source: St Louis Federal Reserve
These macroeconomic indicators are also common outside of the US. Many – even the International Monetary Fund – have pointed to the rise in inflation as a result of higher energy prices in Europe, contributing among other things to the European Union’s recent forecast of near-zero GDP growth for the whole of 2023. Add to this the long-standing demographic challenge of too many people retiring and not enough new entrants, with serious implications for GDP growth.
Related: The market isn’t going up any time soon, so get used to dark times
While these macroeconomic fundamentals are out of your control, there is still a lot within your control. We need to remember that we have significant agency over our lives and don’t need to be dragged into an economic downturn just because that might happen to the economy as a whole—we can thrive individually even during a famine.
Here are five tips to do just that.
Optimize the waiting time. Make the most of your time each day, which may mean learning a new skill or taking on a freelance job that uses your broader skillset. Especially with the advent of artificial intelligence and automation, certain tasks will become obsolete and other new creative opportunities will emerge — and you can capitalize on this trend by gaining the skills to perform those tasks. In certain parts of the labor market, such as B. in the areas of artificial intelligence and cyber security, there are significant discrepancies between supply and demand. Therefore, consider acquiring a new skill that you can use.
Reflect and take stock. It’s far too easy to look at the circumstances we find ourselves in personally or as a society and to worry, but take stock of what’s going right and what you’re thankful for. The holidays are a particularly good opportunity for this. By putting your circumstances into perspective, you avoid many mental rabbit holes that could lead to you becoming more anxious and disappointed, which unfortunately only amplifies the challenging circumstances. Even when circumstances look bleak, remember what you have and what you’ve been through – it will inspire you to keep going.
Expand your network. Building relationships is part of the adventure we are on. Focus on people as real people rather than potential opportunities. People are indeed doors, but treating people in a transactional way distorts your perspective on life and eventually closes those doors because people don’t like being treated like vending machines. (Would you like it if people only spoke to you based on what you could give them?)
Related: 5 reasons why 2023 will be a tough year for global markets
Appreciate small wins. We often focus on the big and noticeable goals or aspirations, but overlook what lies immediately ahead. We have a lot more freedom of choice than we give ourselves credit for! Whether you take care of your property or write an excellent report at work, demonstrating excellence in everything you do creates many more choices in the long run, leading to truly fulfilling and fruitful employment opportunities.
Always save part of your income. Consider investing in structurally sound digital assets. There is no substitute for setting aside resources each month, whether crypto or fiat, to fall back on when you need them most. There will always be an element of unpredictability in the world, so consider these savings your insurance policy in times of market downturns. Although crypto has had a winter, all assets have struggled because the entire market is in a downturn. But the future of big tokens like bitcoin (BTC) and ether (ETH) remains hopeful, and it’s only a matter of time before they recover. Additionally, as governments become more volatile and inflation continues to rise, crypto can be a useful hedging and diversification strategy.
Don’t despair even if the economy is weak. You and your household can still thrive!
Christos A. Makridis is a research affiliate at Stanford University and Columbia Business School and Chief Technology Officer and co-founder of Living Opera, a multimedia-art-tech-Web3 startup. He received his doctorate from Stanford University in economics and management science and engineering.
This article is for general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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