The Most Important US Economy Risks In 2023

The Most Important Economic Risks In 2023

There are many problems and risks in the world, these are very important, and affect the largest economy that is facing many difficulties in 2023.

It seems that 2023 will be a hard year for the US economy due to different risks at different levels that can affect this $25T economy.

In this section of this article by Aron Groups Broker, we want to introduce you to the top 10 most important risks threatening the US economy in 2023.

#1. High Inflation Rate

The inflation rate is an emerging risk for the US economy, the latest data shows that the inflation rate is higher than expected, and this means a higher interest rate is awaiting the future.

• A high inflation rate is one of the most important US economic risks in 2023, and there are many reasons for this
• From decoupling from the China economy to war with Russia, and geopolitical tensions across the world, all of them are important reasons causing higher inflation rates inside the US economy
• It seems that tensions are increasing across the world, energy crisis is a very important element in the higher inflation rate for the US economy

Inflation means higher expenses for production, lower consumption by the people, and higher interest rate slowing the growth of the economy, that’s why we can say that the inflation rate is the most important risk in the US economy for 2023.

#2. High-Interest Rate

Interest rate is the overnight rate that banks lend each other, higher rates mean higher expenses for borrowing that will make money expensive.

• Due to the Covid-19 pandemic, the central bank created a lot of liquidity to support families and businesses, high inflation rate started
• The pace of growth of the inflation rate increased by the Russia-Ukraine war, tensions in the world, and decoupling from the China economy

Now, with the latest data, the inflation rate is higher than expected, and the interest rate is high but it’s expected to be even higher, this means a problem with the growth and a recession is on the way.

High-interest rates are one of the most important US economic risks in 2023 that it seems will last for the next few years.

#3. Recession

Recession is the decline in the economy and is very harmful to any economy.

It’s highly anticipated that the US economy will enter into recession in 2023, there are a lot of reasons for this economic decline which are as follows.

• A higher inflation rate causes higher expenses for manufacturing
• Higher life expenses mean lower demand in the economy for the different products and services
• Geopolitical tensions causing difficulties in the supply chain for different products and services

The higher unemployment and, and lowering of profits are the results of the recession as one of the most important risks in the US economy for 2023.

#4. Record Level Debt

Higher interest rate means higher expenses for the money, which will increase the interest rates of the loans and will create a debt crisis in the US economy.

• Currently, high living expenses have become a major problem for people living in different states
• Now, imagine that these people have to pay more debt, for example, $1k or more to pay off their loans

This is a huge problem for the US economy and one of the most important risks not just for the US economy, but also for the banks, and the whole world.

When you combine higher living expenses, higher rents, a higher inflation rate, and an unemployment rate that is increasing with more money to pay for the debts due to higher interest rates, you can see why this is a real risk threatening the US economy and society.

#5. Disruptions In Worldwide Supply Chain

One of the most important risks in the US economy is surprisingly not related to the economy.

• Increasing geopolitical tensions, energy crisis, war in different areas of the world, and global warming also higher expenses have created a supply chain problem across the world
• The landscape is negative in this area, there will be more difficulties for the supply chain of different products for 2023

Supply chain problems will increase production prices, delay the delivery of different products, and slow the growth of the worldwide economy, which is one of the most important risks in the US economy.