How will economy go in the new year?

Here at the end of the year of 2022, with gasoline prices down and some others stabilizing, is inflation on the wane, or are we in for a lot more?

Is a recession inevitable? Is the United States — and the world’s — economy going to get better, or worse, in 2023?

That’s our Question of the Week for our readers.

Asking about such an accounting might seem best left to the government statistics wonks here at the holidays. So let us interrupt this economic message to say that we as an editorial board sincerely hope that you, our devoted readers, the people who make our news group possible, have had a marvelous Hanukkah, a fantastical Christmas, a delightful Kwanzaa and that your coming New Year’s Eve and Day festivities are a source of joy to you and yours.

But the turning of the calendar is always both a time of anticipation and a summing up of what we’ve seen.

This was indeed the year in which, after decades of price stability in the U.S. — staying very close to economic planners’ desired 2% inflation, long thought to be a number that works for the macro-economy — the costs of goods and services soared. The annual inflation rate for our nation is 7.1% for the 12 months ending in November after rising 7.7% previously in the year, said the U.S. Labor Department.

The reasons are complicated, but the underpinning for inflation surely was in the massive amount of government spending — printing lots of money, figuratively and literally — associated with efforts to mitigate COVID-19 lockdowns in our country. A huge supply of cash can’t help but fuel inflation.

But in a giant economy such as ours, it’s impossible to say exactly how much other factors were at play.

Did companies take advantage of the knowledge of inflation by raising prices capriciously? Why are so many sectors in the economy having such a hard time finding workers, especially with rapidly rising wages? A recession — a fall in GDP in two successive quarters — seems a sure bet. How could we instead avoid it? Markets tumbled across 2022 — will they fully recover toward the end of 2023?

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