Two-thirds or 66% of Americans plan to make New Year’s financial resolutions for 2023, according to a survey by Fidelity Investments. However, the economic turmoil of 2022 is persuading many to approach the new year with caution.
More than a third of respondents said they are in a worse financial situation this year than the year before. About half say they’re ready to "live sensibly" or "plan ahead," the survey said.
"After the stresses of the last few years, Americans are understandably taking a pragmatic view of their financial situation," Stacey Watson, the senior vice president of Life Event Planning at Fidelity Investments, said in a press release. "This is an encouraging indication of the grit and resilience we can tap into when the financial going gets tough. Given the ups and downs experienced, being creative and establishing new financial wellness habits are positive signs many are finding ways to shift the focus, to pay down debt or build up emergency savings. Proper planning, and balance, are key."
Moving forward, 39% of respondents plan to save more money, 28% are looking to spend less money and 32% want to pay down debt.
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Inflation was the biggest financial setback of 2022
Americans ranked inflation as the top financial setback in 2022, the Fidelity survey said.
The Consumer Price Index (CPI), a measure of inflation, rose 7.1% year-over-year in November. While still unusually high, that spike marked the slowest monthly increase since the end of 2021. Nonetheless, the inflation rate is close to its June high of 9.1% when it reached levels not seen since the ‘80s.
Considering the events of the past few years, 45% of respondents say they are considering more conservative goals for the year ahead, the Fidelity survey said.
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Economists warn of recession in 2023
As many Americans plan to live more conservatively in the new year, they may be heading into a recession. Economists with Bank of America announced they expect a mild recession.
"Our economists call for a recession lasting 3 quarters with a recovery penciled in for Q4 2023, as well as a significant unwind of the Fed asset base via Quantitative Tightening of $1.1 trillion over the next year," Savita Subramanian, the head of US equity strategy, quantitative strategy and ESG research at Bank of America, stated.
The Mortgage Bankers Association (MBA) also predicts a recession.
"Next year will be particularly challenging for the U.S. and global economies," Mike Fratantoni, the MBA's chief economist and senior vice president, said at the 2022 MBA Annual conference in Nashville. "The sharp increase in interest rates this year – a consequence of the Federal Reserve’s efforts to slow inflation, will lead to an equally sharp slowdown in the economy, matching the downturn that is happening right now in the housing market."
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