Six burning questions for 2023
In last year’s “Burning Questions,” we pondered pressing topics related to the approaching 2022 elections. There may be no controversial campaigns or hotly contested races in store for the coming year, yet somehow, the political climate seems as fervent as ever. The sense of calm that settled in a few months back, once the ballots were cast and victors declared, has already begun to recede as we contemplate what 2023 might hold. Among the topics making us sweat this January: mercurial gas prices, rising tensions around school safety, the looming threat of recession — and of course, the roads. The “R-word” seems to have become a constant presence in our lives. For months now, the Federal Reserve has been announcing interest-rate hikes on what feels like a daily basis, thus fueling already extensive debate on whether our financial fears will be realized (and whether they already have been). But for all the discourse, a concrete answer has remained elusive. According to the International Monetary Fund, that answer is: probably. The organization predicts that, barring swift action on inflation from policymakers, a recession is imminent — at least on a global scale. Wayne State University economics professor Michael Belzer is less concerned. “Unless something bad happens, I don’t personally think we’ll really get into a full recession,” he says. While multiple factors, such as the Russian war on Ukraine and the enduring disruptive effects of the COVID-19 pandemic on global markets and supply chains, continue to drive inflation, there is cause for optimism. In particular, Belzer points to falling unemployment rates and persistent job availability as signs that the labor market is continuing down the road to recovery. However, he is wary of the Fed’s “aggressive tight-money policies” potentially knocking it off course. Rather than curbing inflation, he thinks steep increases in interest rates could actually serve to stifle economic improvement. “I don’t think that high interest rates will reduce inflation, because the inflation we’re experiencing in this moment isn’t caused by demand shock, like it is in most recessions.” Belzer also discusses gas prices and the international intricacies making fuel prices are particularly difficult to predict. “It’s important to understand that gas prices are not local — oil is a commodity traded on the global market.” However, he suspects that the root of the initial price relaxation — the global economic downturn and resulting reduction in fuel demand — will also “keep the lid on fuel prices” … at least for the next year or so.