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Skip to Content * For Individuals * Invest & retire * Ways to Save * Roth & traditional IRAs * Rollover IRA * Annuities * Retirement plans * My Retirement Plan * Enroll in your 401(k) * Rollover an account * Find a form * Get Help * Help for individuals * Find a financial professional Your financial future starts here Discover your path to investing and retirement * Insure * Ways to Insure * Disability income insurance * Disability income retirement security * Estate planning & irrevocable life insurance trusts * My Insurance * Find a dentist * Find a vision provider * Find a form * View a claim * Get Help * Help for individuals * Find a financial professional Peace of mind starts here Discover how insurance can help you protect what matters * Build your knowledge * Getting Started * Money basics * Investing 101 * Just getting started * Living Your Life * Major & unexpected life events * Your career * Your family & home * Tough money questions * Taxes * Looking Ahead * Build your own financial plan * Planning for & protecting your future * Retirement See all topics and articles For Businesses Search Clear SearchLoading Close search Log inMenu 1. Individuals 2. Build Your Knowledge 3. January economic outlook: What’s in store for your 2023 money goals? JANUARY ECONOMIC OUTLOOK: WHAT’S IN STORE FOR YOUR 2023 MONEY GOALS? QUICK TAKEAWAYS * Self-fulfilling prophecies are hard at work when it comes to people’s economic outlooks. But data may be telling us a different story—one of resilience. * There might not be a clear economic forecast for a while. Too many unique events are happening at the same time that don’t have precedent. Even so, it’s possible to pressure test how you react when faced with that uncertainty. It’s January, the time of resolutions. The economy, of course, can’t make any resolutions; it’s just data and decisions and emotions jumbled together, sometimes delivering outcomes we like, sometimes delivering a whole lot of ambiguity. You, of course, can make some resolutions about how you feel about and react to the economic news. A few things are worth watching and thinking about. ECONOMIC RESOLUTION NO. 1: DEFINE WHAT VOLATILITY MEANS TO YOU. How many headlines have you read over the last year that described the bottom falling out of the market? A lot, probably. Sure, the market has ebbed and flowed. But what does “the bottom falling out” mean, exactly? “Today's news, and how we are inundated with messaging all the time, has some people reacting quickly—and sometimes a bit emotionally—to movement in the stock market,” says Heather Winston, director of individual solutions at Principal®. “Yet the reality for most individuals is that these short jerks up and down may have no bearing on achieving long-term goals as long as you don't sell. We have to remind ourselves that it's time in the market, not timing the market, that will lead to more success.” Take, for example, the Dow Jones Industrial Average in 2022. How do you feel it performed? Probably not well. But actually the Dow Jones, which began the year around 36,000, was hovering above 33,000 by end of December—about a 8% loss in a very messy, very chaotic year.1 “There are all these negative inputs, and that creates a shifting perspective that sometimes isn’t grounded in what’s actually happening,” Winston says. “But we can't always recognize this in ourselves when it's happening, primarily because behavioral finance tells us that we will always feel the pain of loss more than the benefit of gain.” As 2023 progresses, it’s helpful to remember that personal finance experts pay attention to a lot more than just the Dow. The CBOE Volatility Index, for example, is something that Winston checks in on regularly. It's a measure of the expectation of near-term—i.e., the next 30 days—volatility and is one way of understanding how investors may feel. In general, the lower it goes, the better the S&P 500 usually performs. At the tail end of 2022, it was trending downward. Your wallet: How do you define volatility in the markets? If you can set your own expectations, not defined by headlines, then perhaps in 2023 short-term shifts won’t worry you as much. One concrete strategy to protect yourself from volatility in all its forms is aligning your investment risk approach with diversification of your assets. That’s something you can do on any day, at any time. ECONOMIC RESOLUTION NO. 2: FOCUS ON A WELL-ROUNDED ECONOMIC PICTURE. Have you heard of a self-fulfilling prophecy? It’s the idea that what you (or others) expect in turn influences how you act or behave, thus leading to an outcome—a feedback loop, if you will. Even though self-fulfilling prophecies are based on feelings, not data, they’re surprisingly influential when it comes to the economy. For example, by objective measures, the economy might be described as messy and weird, but it’s certainly not bad. Unemployment is below 4%. Real gross domestic product grew nearly 3% in the third quarter of 2022.2 Personal income also grew in 2022.3 Consumer prices might just be ready to slow down, too, with gas prices at one point in December at their lowest since February 2022.4 High inflation and increased interest rates certainly impact a lot of people, causing real pain, but they’re not the only measures that matter, and not the only measures that indicate a recession. What will 2023 hold for all those gauges of economic health? Again, it’s helpful to dig deeper into data points that don’t make the news but that others look to. The Federal Reserve Bank of New York, for example, releases a lot of data- and sentiment-driven information about the economy. That includes everything from a Labor Market Survey about employment transitions and wages to a monthly Survey of Consumer Expectations. While end-of-2022 data is certainly no sure thing for what 2023 will bring, little was particularly alarming in November and December—more of the same mixed signals. Why is there value in checking out other reliable sources of information? “Risks are always going to exist, but we can better set ourselves up for success by thoughtfully responding to challenges or news as it comes,” Winston says. In 2023, the data points may be a mixed bag, but they’ll also help you know whether a headline wants you just to react and click, not pause and evaluate. Your wallet: Inflation has caused many people to reprioritize, from the labels they’re grabbing off the grocery store shelves to the plans they’re making until prices ebb a little. What financial priority did you wish you focused on for 2022, and how can that influence your money goals for 2023? “Think about something you really can be responsible for and committed to—not something that’s outside your control,” Winston says. WHAT'S NEXT? * Are your retirement savings a priority? If not, what’s one concrete goal you can set for them in the coming year? For example, if you’re expecting a tax refund, do you have the budget flexibility to add it to your retirement account? Log in to your Principal account to see how you’re doing. Don’t have an employer-sponsored retirement account? We can help you set up your own retirement savings. 1Yahoo Finance 2Bureau of Economic Analysis 3Bureau of Economic Analysis 4YCharts The views and opinions expressed are for informational and educational purposes only as of the date noted and should not be considered investment advice. No forecast based on the opinions expressed can be guaranteed and may be subject to change without notice. No investment strategy, such as diversification, can guarantee profit or protect against loss. Investment advisory products offered through Principal Advised Services, LLC. Principal Advised Services is a member of the Principal Financial Group®, Des Moines, IA 50392. Insurance products and plan administrative services provided through Principal Life Insurance Company®, Securities offered through Principal Securities, Inc., member SIPC and/or independent broker-dealers. Investment advisory products offered through Principal Advised Services, LLC. ©2022 Principal Financial Services, Inc. OUR COMPANY * About Us * Investor Relations * News Room * Sustainability WE'RE HIRING * Careers * Global Jobs * Financial Professional Opportunities * Internships * Recent Graduates OTHER SITES * For Dental Providers * For Financial Professionals * Principal Asset Management GET HELP * 800-986-3343 * Help Topics * Contact Us * * * * * Terms of Use * Disclosures * Sponsorships * Privacy * Security * Report Fraud * Site Map * Internships * Global Jobs * Español © 2023, Principal Financial Services, Inc. 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