"More of the same" is a fair estimate for what will happen in the 2023 but timing is everything. Although the issues we're all facing and their underlying causes are easy to see, it's impossible to know which straw exactly will be the one to "break the camel's back" so to speak. We're already at 4.5% on Fed Funds Rate which is surprising to many including myself.
When we consider that, in order to even make a dent to current causes of the inflation/deflation/stagflation hat-trick of economic mass destruction interest rates need to rise much more, then it's probably a no-brainier to expect there will be a financial melt-down a-la 2008 sometime soon, probably Spring 2023:
"Arguments about data aside, as I said when the Fed cranked up interest rates another 50 basis points at its December meeting, my pessimism is rooted in more fundamental dynamics. In a nutshell, this economy is not built to operate in a high-interest-rate environment. And the Fed has now raised interest rates to the highest level since 2007.
Quite simply, the US economy is addicted to easy money. It is addicted to artificially low interest rates and quantitative easing. You can’t take an addict’s drug away without sending him into withdrawal."
Withdrawal is a good description of what I expect the conditions to be in 2023 so, as a lender I'll be taking a battle-ready stance with a priority on return OF capital as opposed to return ON capital - basically a higher scrutiny of risk factors and a watchful eye on specific industries like transportation which is going through convulsions right now even as I write this:
"Naturally, with the economy set to slump into a Fed-induced recession, the trend will only get much worse into 2023 with economists expecting unemployment to rise, inflation to remain relatively high (at least until the economy crashes) and household savings – already at record lows – set to dwindle. At the same time, a growing number of consumers are having to stretch their budgets to afford a vehicle; the average monthly payment for a new car is up 26% since 2019 to $718 a month, and nearly one in six new car buyers is spending more than $1,000 a month on vehicles. Other costs associated with owning a car have also shot up, including insurance, gas and repairs."
I refuse to ignore the things I'm seeing on the ground happening right now. Frankly I prefer to ignore the happy talk coming from my TV, they haven't been right about anything for a very, very long time.
One adverse effect of current conditions is the rates on car loans and mortgages are taking a massive bite out of consumer spending:
“These repossessions are occurring on people who could afford that $500 or $600 a month payment two years ago, but now everything else in their life is more expensive,” said Ivan Drury, director of insights at car buying website Edmunds. “That’s where we’re starting to see the repossessions happen because it’s just everything else starting to pin you down.”
This is going to explode in 2023 as rates continue higher- it's a great time to be a repo agent! Here is the thing that stuck out to me though: Some car lenders are waiving the "1st car loan" restriction which means they will give someone a new car loan even when they already have one. In most of those cases, the 1st car loan is already underwater which makes it very likely for default - this is one car lender cannibalizing another car lender and it definitely won't end well unless you're waiting to buy a used car soon lol!