By Kevin Estes

2023 Was a Busy Year! 🎢

• Inflation started high and was tamed

• There were widespread layoffs, especially in tech

• The S&P 500 returned approximately 26.3% for the year

• Billions in student loans were forgiven

• Revenge spending exploded

Inflation Tamed

Inflation started 2023 higher at 6.4% in January and feel throughout the year to 3.1% by November. Here’s to hoping that higher inflation was temporary!

For those who don’t know, the Consumer Price Index (CPI) tracks a basket of goods and services over time. It covers essentially all expense categories to estimate average prices.

According to the U.S. Bureau of Labor Statistics, annual inflation was:

Annual inflation for the last three Novembers was:

• 6.8% in 2021

• 9.1% in 2022

• 3.1% in 2023

These increases stack on each other. The 3.1% increase was on top of 9.1% inflation last year and 6.8% the year before. Overall, prices have risen 18% in three years.

Those emerging from pandemic hibernation awaken to a world with substantially higher prices. Gas, grocery, restaurant, car, and concert prices have all risen.

Hundreds of Thousands Laid Off

Thousands of companies laid off employees in 2023.

Tech professionals were disproportionally impacted. According to Layoffs.fyi, over 260,000 tech employees were laid off in 2023.

Not included in that list was the approximately 5,000 employees laid off by T-Mobile in August. These positions were largely higher income support roles.

Some of these layoffs were for redundant positions or those added during the pandemic-fueled tech boom. Others appear to have been pre-emptive, hoping to force companies to unlock Artificial Intelligence productivity gains.

However, little of work has disappeared. It’s resulted in even heavier workloads for the remaining employees - and hard tradeoff conversations.

General panic was avoided for several reasons.

• Layoffs disproportionally impacted higher earners.

• The severance package for many employees was generous and facilitated career changes or early retirements.

• Many of the impacted employees were able to find comparable positions within a few weeks or months.

The national unemployment rate held steady between 3.4% and 3.9% throughout 2023, per reports by the U.S. Bureau of Labor Statistics. It was 3.7% as of the latest report in November 2023.

Stocks Boomed

Inflation and layoffs are enabling corporations to:

• charge more for their goods and services and

• spend less on labor.

That’s a recipe for stock price appreciation.

The Standard & Poor’s 500 (S&P 500) is an index which tracks about 500 of the largest companies in the United States.

According to Yahoo Finance, the S&P 500 rose 24.2% in 2023:

• from $3,839.50 close on 12/30/2022

• to $4,769.33 close on 12/29/2023

As good as that was, it understates the returns.

S&P 500 companies also paid dividends of about 2%. Between appreciation and dividends, investors earned a 26.3% return on their S&P 500 investments in 2023.

Student Loans Forgiven

President Biden has worked to cancel the student loan debt for millions of Americans. According to a 12/3/2023 U.S. Department of Education press release:

Today's announcement brings the total approved debt cancellation by the Biden-Harris Administration to nearly $132 billion for more than 3.6 million Americans.

That’s an average of nearly $37,000 forgiven per borrower!

It could have been much more. According to Reuters, the U.S. Supreme course blocked a plan by the administration in June 2023 to forgive $430 billion in student loan debt for up to 43 million borrowers.

Revenge Spent

Travel

Americans continue to spend following their COVID-19 repression.

According to the Delta Air Line CEO in a June 2023 Fortune article, revenge travel is:

$300 billion dollars - with a B

A strong U.S. dollar has fueled international travel - despite wars in both the Ukraine and Gaza.

$1,000 Concert Tickets

Taylor Swift’s concert tour was the cultural event of 2023.

According to The Washington Post, she:

stands to make as much as $4.1 billion from the Eras Tour

CNBC reported that her her tickets fetched an average $1,088.56.

Shockingly, they weren’t the most expensive ticket in 2023. That honor went to fellow female artist Adele, with an an average $1,243.96!

Happy New Year! 🎆

If you’d like insight into your finances…

Disclaimer

In addition to the usual disclaimers, neither this post nor this image includes any financial, tax, or legal advice.