As we bid farewell to 2023, it's time to reflect on a year marked by economic turbulence and uncertainty. From fluctuations in inflation rates to unexpected bank collapses and recession warnings, the financial landscape has been far from stable. However, amidst these challenges, there have been surprising developments, such as the remarkable rise in stock markets.

As we venture into 2024, let's take a closer look at the key events that shaped 2023 and explore how you can navigate the economic landscape in the coming year.

A shifting tide in inflation

In the economic narrative of 2023, one of the prominent themes has been the shifting tide of inflation. Starting the year at an annual rate above 6%, the Consumer Price Index (CPI) has steadily declined, reaching below 4% by September. Core CPI, excluding food and energy prices, has followed suit, albeit at a slower pace.

The good news: Inflation may be slowly stabilizing. The bad news is that may not be enough for The Federal Reserve. The Fed has hinted at potential rate hikes in 2024 if inflation stalls.

The banking crisis

Spring 2023 witnessed the sudden collapse of several high-profile regional banks. While there wasn’t one single cause, rising interest rates and a sluggish economy played pivotal roles in these collapses.

Recession warnings ahead

Despite some economic progress in 2023, experts are still wary of a recession on the horizon. Three warning signs — the resumption of student-loan payments, elevated borrowing costs and the end of tailwinds that propelled strong consumer spending since the pandemic — indicate potential challenges. For example, high borrowing costs for major purchases pose threats to economic growth. That’s exacerbated by factors like geopolitical tensions and waning consumer sentiment. Thankfully though, many economists believe if a recession happens, it will be a mild one.

Stocks rose in 2023

Contrary to the gloom in other economic indicators, stock markets have defied expectations. As of November 2023, the S&P 500 boasted a remarkable total return of around 21%, well above its average annual return. Sectors like technology, communication services, and consumer discretionary stocks spearheaded this rally, rebounding dramatically and becoming the year's top performers.

Taking action in 2024: Save more with peace of mind

Despite what might be happening in the broader economy, there is plenty of room to take charge of your financial well-being in 2024. A positive step is to supercharge savings at Chevron Federal Credit Union, leveraging high-yield savings accounts to grow savings faster. This not only acts as a hedge against economic downturns but also ensures the safety of funds through federal insurance. By adopting proactive financial strategies, you can navigate any challenges ahead with resilience and confidence.

The last year may have felt like a bumpy ride, but there are positive signs that 2024 may bring more economic stability. Between slowly cooling inflation and rising stocks, there is plenty to celebrate in the new year. No matter what 2024 brings, your partners at Chevron Federal Credit Union are always in your corner.