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williamtcooper
Community Member

Will the World Economy Avoid a Recession during 2023?

Can we avoid a worldwide recession during 2023? Why or why not?

 

I have seen a large influx of businesses that have been affected since June 2022 with slower sales.

 

I have noticed more Freelancers commenting on more competition.

 

What are your thoughts and what have your observed?

 

Please use any downtime to increase your Skills - it will pay off in 2024!

 

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70 REPLIES 70

Roy, will do. I have 2.5 million LinkedIn, Facebook and Twitter Followers and am always interacting with them and coming up with interesting topics to discuss. Maybe I can use the most popular topic on the other sites for ideas once a week on Upwork. Have an awesome Tuesday!

Dear William

I am really impatiently waiting for your's upcoming topics to read & discuss.

Just watched & completed the upwork Event with Mr, Will & Adam as on today night. Hopefully, would like to watch you in the upcoming Events in the upwork community.

With Regards

R Roy

Yes, it would be fun to be part of the Events - I just watched part of Will and Adam also. It was informative to know that he bills 2x his Freelancers rate to the clients. 

Dear William

Hope to watch you making some Events sooner with Freelancers, Agencies etcs.

Till then

Waiting

R Roy

sohaibkhn
Community Member

Unfortunately for all of us, inflation needs to be curbed. Central banks hiking rates will cause a recession. They're trying to prevent hyperinflation. Wish we had a stable currency that we could all trade in. 

Hey Sohaib, Bitcoin was supposed to be that solution and we all know how that turned out 🙂

The part that consistently strikes me is how artificial the economy is, but governments consistently fail to address as such. US dollar value has inflated so much, pennies aren't even worth the material and process that makes them! So, there are two obvious solutions

  1. Remove pennies altogether - there will now be many, many obsolete coins.
  2. Unilaterally deflate the value of the dollar to 20%, 10%, or even 1%, so that pennies have worth again.

Personally, I like option 2. I don't know what all of the repercussions would be - other than the distinct reduction in the number of millionaires and billionaire and the need for all price signage to be reset (which retail and grocery stores do weekly already).

 

One of the cores of the world economy is gambling - because that is what stock trading is, at its core. That an asset can, with no reason grounded in supply, suddenly tank or skyrocket in value is a prime example of artificiality. And that goes for purchased goods and labor as well - demand dictates the value, with some influence from supply. Is the labor of a farmer in Asia really worth less than the same labor done in North America or in Europe? Nope. But somehow we decided that it is!

 

Truly, the world economy could benefit from a mass, international reset. Of course, geopolitics can always assert influence down the road, artificially raising or lowering rates/prices, to edge out competitor nations or control a populace. I don't know if that can ever be excised from the world economy - or even local economies, because competition - but that doesn't mean we shouldn't try remedies to at least mitigate the symptoms. And no, I am not advocating for world socialism or communism (although local socialism, done correctly, has had great results). But clearly, un-fettered capitalism at the world stage is not in everyone's best interests.

Hey Jonathan, Gresham's Law of Economics would apply if the dollar continues to be deflated. IE all the pennies and nickels would be removed from circulation because the metal content is more valuable than the denomination. Basically bad money pushes out good money or replaces it.

 

The stock market is real. The Dow Jones was 759 in 1980 and today is 34,000 or an appreciation of 1,000s% excluding 1,000s more for the dividends. The most straight forward investment is symbol DIA. Buy, hold and reinvest the dividends and retire with social security. Too many people gamble on individual stocks versus the basket of 30 and pay the price.

Hey Jonathan, you will find this interesting. Did you know that from 1793 to 1857 the United States had pennies that were as large as half dollars today? We even had half pennies from 1794 to 1857. This is what inflation has done to our currency system.

"One of the cores of the world economy is gambling - because that is what stock trading is, at its core. That an asset can, with no reason grounded in supply, suddenly tank or skyrocket in value is a prime example of artificiality."

 

This is short-term non-value thinking from movies IMO. The long-term value grows because the money supply grows. A ton of money is poured into stocks. Better be thankful that a lot of people's retirement (IRA) is probably running on it. Kinda a wise financial move by the status quo IMO. Stocks are saving us from hyperinflation and massively overpriced housing. Where would that money be otherwise?  The greater economy. Housing. Tons of others.

 

I'm no advocate for the petrodollar (conflated with capitalism and a ton of other negative things unrelated), obviously; but fiat currency is not capitalism. Capitalism, by the definition of trading company stock, is keeping the economy afloat. This is why the rich get richer. New money created gets poured into company stock.

 

It's your choice to believe that banks and/or government create new money. 

 

Imagine if ~40.7 TRILLION dollars flood the economy right now. Here's a source for that: https://data.worldbank.org/indicator/CM.MKT.LCAP.CD?end=2020&most_recent_value_desc=true&start=1975

sohaibkhn_0-1673585345120.png

(2020 numbers, definitely higher now I would assume)

 

The current Money Supply M2 is in the ~20 trillion range

https://fred.stlouisfed.org/series/WM2NS

 

sohaibkhn_0-1673585165675.png

 

Remember Rome, Germany - Weimar, and many other cases of empires throughout history. History shows that the money supply shouldn't be messed with. Wars are the pressure that pushes empires to do so. They fall. The US is a slow case because of the Bretton Woods system. 

 

It's a common myth that wars help the economy. That money/manpower can be used more effectively elsewhere. Like my pockets lol. More realistically, R&D or well, actually feeding and housing poor people. Ever seen a juicy government contractor salary? That's where a big chunk of your tax money is symbolically going. 

 

Note M2:

"(2) small-denomination time deposits (time deposits in amounts of less than $100,000) less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market funds (MMFs) less IRA and Keogh balances at MMFs."

 

This is not financial advice.

Hey Sohaib, I agree that day trading is gambling, however longterm investing is investing. Companies are what produce all the products and services that each one of us purchases. When someone buys a stock, they are purchasing a piece of that company. For example, we could purchase Upwork stock IE a real company. Have an awesome day!

Yea, I discussed that agreement in length in my post, might've not been clear since I've made a few updates and had gone into detail. Figured it was implied.

Hey Sohaib, got your message about SEO and I can't locate the community and as well as I can't locate the private message feature in your Profile. Would you please give further information on both? Thanks!

Sohaib,

 

One of LinkedIn followers said they are paying $10 for a dozen eggs in California. How much would that cost where you live?

8467c28e
Community Member

There are many factors that can affect the global economy, such as geopolitical tensions, natural disasters, and pandemics. In recent years, we have seen how unexpected events can disrupt economic growth and lead to recessions.

Regarding your question, it is difficult to say whether the world economy will avoid a recession during 2023. Some economists and financial experts believe that a recession is possible, while others remain cautiously optimistic.

The COVID-19 pandemic is still a major factor that can impact economic growth, especially if new variants of the virus emerge and lead to lockdowns and restrictions. However, the rollout of vaccines and increased immunity among populations can help mitigate the effects of the pandemic on the economy.

In addition, the current state of businesses and freelancers that you've mentioned could potentially have a ripple effect on the economy. If there are many businesses struggling with slower sales and increased competition, this could lead to job losses and reduced consumer spending, which could in turn negatively impact economic growth.

Overall, it is difficult to predict with certainty whether the world economy will avoid a recession during 2023. However, it is always wise to be prepared for potential economic downturns by increasing one's skills and diversifying income streams. By doing so, individuals can better weather any economic storms that may come their way.

Utku,

 

Looks like we are getting closer to a recession with the current banking crisis.

William,

 

Let me explain what happened. The first generation economic crisis models argue that in economies with a fixed exchange rate system, increasing budget deficits lead to financial crises. According to the argument of this model, governments print excessive amounts of money to finance rising budget deficits and as a result, the fixed exchange rate policy breaks down. The breakdown of the fixed exchange rate policy causes foreign investors in the country to want to leave and locals to turn to foreign exchange. Speculative movements triggered by the central bank's inability to meet the increasing demand for foreign exchange trigger a crisis. When the first generation models failed to explain the exchange rate mechanism crisis (ERM) that emerged in Europe in 1992-1993, second generation crisis models came to the fore. First generation crisis models mainly look for the causes of crises in macroeconomic problems. However, as in the ERM crisis, the absence of a problem in macroeconomic models before the crisis necessitated a new approach. According to this new approach, speculative attacks on the local currency during a period of successful performance of the country's monetary and fiscal policies may cause an economic crisis. The risk appetite brought about by the functioning of the banking system lies at the heart of the third generation crises. Banks, whose most important income is the interest income from loans, may also turn to high-risk projects in order to increase their profits.

 

This attitude of banks causes the prices of various financial assets to increase excessively over time. This situation, which we call a "bubble", is not a permanent equilibrium, but rather a temporary but extremely risky climate. As the sustainability of the system begins to be questioned, rising concerns burst the bubble and the prices of these assets fall rapidly. As a result of this decline, banks begin to have problems in collecting their loan receivables, and finally the banking crisis triggers the economic crisis by bringing along currency crises. What happened to Silicon Valley Bank is different in two ways. The first is that the bank's loan portfolio is heavily concentrated on crypto start-ups. The second is the high proportion of "government bonds held to maturity" purchased with deposits. The proportion of government bonds in the bank's total assets is just below 80%. There are therefore two main reasons why the bank failed. The first is that its client portfolio consists of crypto-asset start-ups that tend to move fast and have a high appetite for risk, and the second is that its assets are made up of treasury papers, whose value is volatile and depreciates depending on monetary policy during periods of exit from the crisis. Although the authorities state that the situation is under control, if this bank failure spreads to the banking sector, then it may be possible to call the resulting crisis a "crisis of the fourth generation" in terms of its content.

7bd0d548
Community Member

Buddy, you should ask in quora.

Did you know that your Upwork profile is set to Private so it can't be viewed?

Ely is a Client, not a FL. That's why.

Uh, how can you tell?

His long-term activity in the Client forum

Thanks!

a1ebd38c
Community Member

World economy doesn't exist as such, we can maybe extract 2 major markets - western and eastern - and even those contain huge markets inside, out of whiich some can function selfsufficiently. Although both markets are connected, that connection had weakened in recent years, starting in 2008 (with crisis that had never been solved), culminating since the end of 2019 to start of 2022 and now the decoupling of markets is taking exponential pace. The main reason for that is the political/ideological, we can call it - loss of trust.

The inflation and recession affect western market in major, with double digits. The main reason for that is of course the same as the reason for 2008 debt bubble crisis. Western economies don't have industry and resources - in other words, they are dependent on imports of these products/components and especially resources from the eastern market. By trying to impose their own rules and regulations onto the market they are depending from, western economies cut itself from possibility to even have conditions to produce without paying too high fees and taxes for that. That left the western market to continue with GDP debt bubble and services/finance economy, while it still needs those resources, industrial products and components - that need, that DEMAND western market can ignore, but it is still there and it wont go away if you just convince yourself that you don't industry or resources, in matter a fact that need will never go away and the recession is the exact result of market's failure to satisfy the demand, caused by market regulation.

Eastern market was only dependent from western market when it comes to insurance/finance part of business. Failure of 2008 was the first sign that the game is not fair, that agreement doesn't have to be held, that rules can be one-sidedely invented and imposed when someone wants, and actions in the years after only confirmed that. Currently, eastern market creates its own financial solutions, since all indications are that western mechanisms are not trust-worthy and that they will be used to affect the stability and prosperity of the market, if the market remains dependent on them. For that part and that part only and for a time until new, parallel financial system is established, eastern economies might face less growth rates, in some cases one-digit inflation. 

I don't see any effort in the western economies to build its own selfsufficiency by stimulating production, industry, business on its own markets, since it would require good terms and trust building with the east and that west is not ready to do - in matter a fact, west still tries with inventing new regulation and imposing new rules. How we call economy with bunch of regulations and rules? Command economy. Term is applicable to any behind-story (ideology) you want to attach it to, but the result in terms of economy will unfortunately be the same nonetheless - collapse. I lived through command economy for a good chunk of my young age and I know it when I see it and I can draw so many many maaaaany parallels to prove you this. 

Where all of this is going and what it means for UW and freelancers? I'm affraid things are going to get much worse before they get better - it is just in the nature of human being to feed its own ignorance and ego on the path of personal success. Ignorance and ego make human first to consider himself more worthy than other people and from that comes the right to decide how things will be, to change things just like that, to not fullfil agreement etc. Upwork's destiny won't be much different, what you will see is more and more rules in try to create demand for work within the environment that does all it can to surpress all the real work and promote some kind of beauraucracy type of work. That spiral has to collapse, there is no way out of it because of ignorance. Freelancers  - most of them will be chased away by bunch of rules, only several the largest will remain, but the same goes for clients. UW will become platform for few big clients and several large freelancers/agencies. It may be profitable by reports, but the revenue will be smaller and the real freelancers, people who use their lance to get some work here and there, will have to find different means of achieving their goals, UW is reserved for UW Elite.

Peter,

 

What would you change?

In terms of whole economy, it really comes to political moves, since those are now mostly determining the state of western economy. I would make moves towards building productive relationship and competition with eastern market, it is really A-MUST-DO condition - no one wins destructive competition when all competitors have capability to destroy everything around themselves. That is in general, nuances are too numerous for us to discuss on forum.

Very little of this is direct UW fault to be honest. Maybe we can place some blame on decesion making, but even those decesions were enforced and preconditioned by the whole state of economy which is far from being work-friendly. What UW can do in these conditions? Again, I don't know how honest is the goal of shareholders to maximize profits, since they are mostly big corporations who by definition go in line with the politics, but if we assume the goal of shareholders is honest - I would:

- in every way possible keep the same level of attachment to both eastern and western markets,
- in every way possible seek to attract small/medium CLIENTS from eastern market, since small and medium business are thriving in industry/resource economies and are in need of services that can help them win in local competition,
- in every way possible try to bring my own business to a state where people who are using my services have trust that their payments and earnings are secure and not affected by change in general politics (people get paid, no issues with payments/withdrawls) - people pay me a fee to cover all of this for them, I am doing only that, providing that value for them, paying what I need to pay to whom I need to pay, not going at all if people paid what they need to pay unless it is my own fee or refund related. 
- keep an eye on the new financial system that BRICS countries are developing and be ready to step up and provide connection between two systems (again emphasis is on connecting people), so clients and freelancers can rely on me to send and recieve payments nonetheless if the system is SWIFT or the new one.

In general, I would try to be inclusive rather than exclusive, constantly working towards attracting people to use my services. And in order for them to do so, they need to see real value for their business, especially in years of crisis. Providing value to everyone directly involved will support many struggling businesses that would be maybe hiring on UW and other sites if there was no crisis. However, major economic and political shift is needed on much higher levels for crisis to disappear - until then we can only do what we can do for our businesses to survive.

I just got a simple idea. Why wouldn't UW help people who are seeking and offering traditional work, not only speicialized type of work the UW is most recognized by. So, focus here is - clients hiring local people, e.g. bakery in Beijing can hire local bakers. The mechanism is similar to existing mechanism, just much simpler - workers could create profiles to offer their services (simple social networks type of profile is the most user friendly) and businesses can create business profiles (again similar to social networks), all of that costs nothing, they can market for free, both workers and small businesses and the network is closed of course, only those registered can see and browse through.

Businesses post work positions they need hiring for and all registered workers who fit category can see and apply to those posts. Client picks one or more people that applied and starts conversation - at the end of conversation both worker and client will have options to choose if the agreement is met on hiring and they both need to confirm if so. If client wants personal meeting with the worker that will be 3rd option and again both need to confirm if so. By confirmation on personal meeting, both sides agree that if the contract is reached, worker will upload the image of specially created document (which is available for client to download once client picks the 3rd option and document includes the business name, worker name, they both need to sign etc) to the conversation, client will have to confirm it is the regular copy in the same conversation, after which UW charges client with certain amount of money, based on the value/time span indexation.

Within the total amount UW charges client, it should be calculated the percentage that UW will pay to worker for succeeding in being hired. In example it would look like this - restaurant in small town need a cook, after going through the people's profiles and conversation restaurants decides to call one candidate to personal meeting and candidate gets hired for $1000/month for 1 year, client and worker sign the document created in conversation, worker takes a clear picture and upload it to conversation, client verifies it, UW charges client for let's say $10/month, it can be one-off fee straight away $120 and now - how much of it is reasonable to invest in the same worker to continue working after that, next year? Let's say $60. That is how much you pay to worker for being hired and user gets that from UW, their wage is of course separate, but this provides opportunity for regular worker to earn some extra money by just being hired over UW, while for small business it makes whole process easier, starting with getting out there and telling "I need workers" to actually hiring. All numbers are merely provisional here, of course it is needed to do good calculations based on the value and the time span of the contract. But what is important - legal issues like social and taxes and all of that still reside on domestic laws of the country business and worker are located, UW doesn't have anything with it, and the document they might use in conversation only can be used for the purpose of charging client for hiring and getting a cut of it to worker on UW site. This opportunity to get a regular job which is not high tech or service more easily and get some extra money for it is good incentive for regular workers and clients to consider UW.

There are already lots of recruitment websites like you're describing - why not just use one of them, if you're looking for a permanent, local job? 

a961425f
Community Member

poor people are always on the verge of experiencing a "recession"

although if there is a pinch, sure they'll be cut backs as seen with the most recent pandemic although it was not fiscally inspired or a result of overspending/missappropriation of funds, or other companies going belly up.

I havent all the statistical data , but quarterly reports indicated the food prices are on the rise while gas and oil have brokered a deal not to raise gas prices to extrodinary heights.

i mean a cup of coffee used to be $1.08 now its almost $2 

thats a huge hike.

Kevon,

 

So far so good in 2023, now it's whether the world escapes a 2024 recession especially with China slowing down.

I've heard about the "china" claims

given the circumstance  they appear to be tiptoeing lightly in regards to the current conflict that brewing

lots of conjecture and hear say. nothing offical and concrete from these "news networks"

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