💡 One of the ways we use Plus is combining data from multiple sources to create up-to-date dashboards for anything, from building Plus to monitoring current events. Look out for occasional posts, nicknamed “What the Plus!?” in which we’ll share what we’re keeping an eye on in the broader world, and how Plus helps us do so.
The last two years have been an economic roller coaster. Prior to COVID, the US economy was on fire (in a good way)—the stock market was at an all-time high, interest rates were at an all-time low, and inflation was an academic word that economists talked about from time to time.
After the start of COVID in Q1 2020, the stock markets plunged 30% over the course of a few weeks. And then—to everyone’s surprise—things turned around and the stock market rose 100% from March 2020 to December 2021.
Then in 2022, the market turned around again. The crypto market started to cool off (and then plummet), inflation started to skyrocket, and the housing market slowed to a halt as interest rates spiked. (Check out our previous “What the Plus?!” articles on crypto and real estate here.)
What’s going to happen to the economy in 2023?
Here are 8 charts (inspired by @arvanaghi’s tweet) showing the current state of the US economy. Keep track of this dashboard with us to see how these trends change over the course of the year.
⚡ By the way, you can try out Plus (without signing up or installing anything), by clicking “Copy Link” and pasting any of the links below into a Notion or Coda doc to embed Plus directly in your own document!
Overall economy overview
This set of charts give a quick glance at the
- Layoffs and hiring at tech companies (from TrueUp.io)
- Interest rates and market data (from FRED, BLS, and TradingView)
- Consumer sentiment data (from FRED).
Combining data from multiple sources helps create a balanced picture of the economy and show different long-term trends in the context of one another.
The tech job market
Tech companies have been bellwethers of the stock market over the last few years because they were such a major driver of overall economic growth. Until recently, investors were happy to invest in tech companies and put a heavy premium on future growth vs. profits today.
However, in 2021, the tech sector started underperforming the rest of the market, and as the stock market began rewarding profitability over growth in 2022, tech companies began reducing open roles and laying off employees.
If tech companies continue to lay off more people and reduce the number of open jobs, this is an indicator that their management teams (who know more about future customer growth and investor demand) do not think the market is going to markedly improve in the near term.
Conversely, as these trends start to reverse, it means tech companies expect larger profits, more growth, and more funding to invest in their businesses.
The debt market, inflation, and the stock market
One of the primary reasons that the housing market slowed down drastically in 2022 is the increase in mortgage rates. When rates tripled from ~2.5% to ~7.5%, the mortgage payment for a $500K loan increased from less than $2,000 a month to nearly $3,500, making it much harder for people to purchase a new home.
The main driver of mortgage rates are treasury rates (debt that is issued by the US government), and there are two key things to watch in the debt market right now:
- The inverted yield curve: There are a lot of complex articles explaining the “inverted yield curve,” but the main takeaway is that this chart should go up instead of down if the economy is healthy. When this chart goes down, it means you get less interest if you lock your money up for a longer period of time. That means investors have less confidence in the short-term future of the economy, and a recession may be coming.
- Inflation: The primary mechanism the Federal Reserve has to influence the economy is interest rates. However, they have to ensure the economy is healthy AND limit the amount of inflation. These two goals are often at odds because the best way to grow the economy is to lower interest rates, but the best way to combat inflation is to raise interest rates. If inflation continues to remain high, the Fed will want to keep interest rates high to keep inflation under control.
Last but not least, one of the main drivers of the economy is the stock market. When the stock market goes up, people don’t spend as much time reading articles about the economy, and they are happy to go buy stuff, invest in businesses, and the economy continues to grow.
One of the most important factors in the strength of the economy is whether consumers are spending money, and the best ways to get them to spend more money are either give them money (like the COVID stimulus or tax refunds) or make them feel confident in the future of economy (i.e., they will have more money tomorrow than they have today).
It’s an interesting time right now because consumer sentiment is at a 10 year low (and trending up), and consumers are saving less money and taking on more debt.
This could be because things are getting more expensive due to inflation, and people need to spend more money for their daily expenses, or it could be that people are spending down their existing savings because they are confident the economy is going to improve in the future.
We’ll continue watching to see what happens, but we know 2023 will be an interesting year!
💬 If you have an idea for a “What the Plus?!” dashboard, DM me on LinkedIn. Or if you’d like to see how Plus brings together all of your data where you need it, without having to worry about complicated setup or integrations, sign up now.