Wells Fargo Investment Institute 2023 Outlook: A Year of Recession, Recovery, and Rebound
December 09 2022 - 9:00AM
Business Wire
2023 Outlook report looks closely at inflation, interest rates,
and corporate earnings
Wells Fargo Investment Institute (WFII) has released its “2023
Outlook: Recession, Recovery, and Rebound,” which outlines WFII’s
expectations for a recession in the first half of 2023, recovery
around midyear, and a rebound that gains strength into
year-end.
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Wells Fargo Investment Institute 2023
Outlook (Graphic: Wells Fargo)
The report looks closely at three key drivers: inflation,
interest rates, and corporate earnings. WFII believes that the
decline of inflation will be a dominant theme in 2023, shaping the
trajectory of economic growth and interest rates. Highlights of
WFII’s forecast include:
- A recession and unwinding of inflationary shocks of the past 18
months could allow inflation to decline to under 3% on a
year-over-year basis by year-end 2023.
- A moderate recession in the first half of 2023 may lead to a
contraction for the year as a whole, marked by -1.3% U.S. GDP
(gross domestic product) growth.
- Once investors begin to anticipate economic and earnings
recovery, the S&P 500 Index is forecasted to gain into
year-end. S&P 500 Index target range is 4,300 – 4,500 for
year-end 2023.
- Federal funds rate forecast of 3.50% – 3.75% anticipates
multiple policy interest-rate reductions after rates reach a peak
above 4.50% early in 2023.
“The unfavorable risk-reward balance in both equities and fixed
income jolted portfolio performance in 2022 and tilted our guidance
more defensively for most of the year,” said Darrell Cronk, chief
investment officer for Wells Fargo Wealth & Investment
Management. “And while we expect an economic recovery after
midyear, we anticipate 2023 will be a volatile and challenging year
for investors as we transition from a recession to a recovery, yet
we believe that it may create strong opportunities to reposition
for growth and back into a more pro-risk stance as the next
economic recovery and bull market emerges.”
The report provides advice and guidance, economic and market
forecasts, where WFII sees opportunity, and five portfolio ideas
for the coming year.
Investment and Insurance Products
are:
• Not Insured by the FDIC or Any
Federal Government Agency
• Not a Deposit or Other Obligation of,
or Guaranteed by, the Bank or Any Bank Affiliate
• Subject to Investment Risks,
Including Possible Loss of the Principal Amount Invested
Risk Disclosure
Forecasts and targets are based on certain assumptions and on
our current views of market and economic conditions, which are
subject to change.
The information contained herein constitutes general information
and is not directed to, designed for, or individually tailored to,
any particular investor or potential investor. This report is not
intended to be a client-specific suitability analysis or
recommendation, an offer to participate in any investment, or a
recommendation to buy, hold, or sell securities. Do not use this
report as the primary basis for investment decisions. Consider all
relevant information, including your existing portfolio, investment
objectives, risk tolerance, liquidity needs, and investment time
horizon.
All investing involves risks, including the possible loss of
principal. There can be no assurance that any investment strategy
will be successful and meet its investment objectives. Investments
fluctuate with changes in market and economic conditions and in
different environments due to numerous factors, some of which may
be unpredictable. Asset allocation and diversification do not
guarantee investment returns or eliminate risk of loss.
About Wells Fargo Investment Institute
Wells Fargo Investment Institute, Inc. is a registered
investment adviser and wholly-owned subsidiary of Wells Fargo Bank,
N.A., a bank affiliate of Wells Fargo & Company.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial
services company that has approximately $1.9 trillion in assets,
proudly serves one in three U.S. households and more than 10% of
small businesses in the U.S., and is a leading middle market
banking provider in the U.S. We provide a diversified set of
banking, investment, and mortgage products and services, as well as
consumer and commercial finance, through our four reportable
operating segments: Consumer Banking and Lending, Commercial
Banking, Corporate and Investment Banking, and Wealth &
Investment Management. Wells Fargo ranked No. 41 on Fortune’s 2022
rankings of America’s largest corporations. In the communities we
serve, the company focuses its social impact on building a
sustainable, inclusive future for all by supporting housing
affordability, small business growth, financial health, and a
low-carbon economy.
News, insights and perspectives from Wells Fargo are also
available at Wells Fargo Stories.
Additional information may be found at www.wellsfargo.com |
Twitter: @WellsFargo.
CAR-1222-04144
News Release Category: WF-ERS
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version on businesswire.com: https://www.businesswire.com/news/home/20221208006011/en/
Media Sarah Kerr, 917-588-5919
sarah.kerr@wellsfargo.com
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