5 Scenarios For Where The Economy Is Headed In The Short-Term

Jonathan Garner
2 min readFeb 10, 2023
Photo by Torsten Dederichs on Unsplash

There’s been a lot of talk about where the economy is headed, given the reality of higher prices and higher interest rates. Here, I want to talk about a variety of scenarios that could occur. The benefit for you is that you will have an outline or snapshot of what will most plausibly happen, overall.

Let’s get into it!

1. Financial Crisis
Perhaps this isn’t the most likely scenario or likely at all. However, it is a possibility that we could have a financial crisis. Proponents of this view will point to the fact that there is still a lot of debt in the system, even after the Great Financial Crisis (GFC).

The idea, here, is that since interest rates are going higher, there will be a rise in debt defaults.

2. Deep Recession
This scenario imagines the unemployment rate going to the moon, like a rocket ship. This is exactly what happened in March 2020.

3. Standard Recession
There’s not much that’s flashy or sexy about such a scenario or headline. On the other hand, recessions are very painful, so it’s not something that isn’t worth writing home about.

4. Mild Recession
I’m sure some will think this is an oxymoron. How can a recession be “mild”? Okay, it depends on what we mean; a better way of putting it might be to label it a ‘milder’ recession.

5. No Recession
This scenario has been dubbed a “soft landing”. If it seems implausible, that’s because it is. I’ve talked about this before. Basically, it’s not clear that such a scenario makes sense. But even if it does, proponents of the view have only pointed to 1 or 2 cases where soft-landing occurred, allegedly.

As always, you should hope for the best but prepare for the worst. How do you prepare?

1. Have emergency savings
2. Hold a stable job

I don’t claim that these two steps are exhaustive, but both steps — the first and second — are both important.

Prepare.

Photo by Erin Cho on Unsplash

--

--

Jonathan Garner

Finance/Investing/Economics/Philosophy/Religion blogger. I’m also a Philosophy of Religion blogger:https://jonathandavidgarner.wordpress.com/