Time will tell if 2023 is a recession or reset

By Guest Columnist Joy Foy

Depending on who you ask, our country is enjoying the best of times or the worst of times.

  
The politicians would have us believe that unemployment is down, the job market is strong, wages are higher than ever, and life is good all the way around.  

The reality for most folks is that there aren’t enough people to fill the jobs available, those working are doing twice as much to help company owners cut overhead, and interest paid on loans is much higher than interest earned on savings.   

A recession is defined as two consecutive quarters of negative gross domestic product (GDP).  If changes to the current trend, which I will refer to as a reset, do not happen to level out the interest rates, the wage rates and the housing market, a recession is likely. Politicians have tried to “fix” or at least starve off a recession by raising the interest rates and putting more government money into the economy. However, a hike in interest rates will have a negative influence, and the extra government checks in the hands of Americans has created more credit card debt than paying down debt.  

Real estate, as we were told by Julene Stewart, senior mortgage broker with Fidelity Mortgage, LLC, at a recent Lions Club meeting, impacts almost everyone, even if you aren’t buying or selling real estate. She explained that mortgage loans are purchased by investment banks (such as Goldman Sachs) and Fannie Mae and Freddie Mac. When these investments are traded on the stock exchange, the rise and fall of these mortgage-backed securities are a huge influence on retirement fund investments, thus first-time home buyers to those in retirement age feel a negative impact.  

A reset or adjustment is certainly due, given the housing market of recent days, where homes were being sold above the asking price. In the past, where the market allowed houses to continue selling above their market value, a collapse of the economy eventually happened. With the housing in Madison County so underbuilt, according to Adam Moore with 4 Corner Properties, LLC, the price of homes on the market is staying in the high price range. Fidelity Mortgage and 4 Corner Properties are financing and selling homes to people moving into Madison County for all kinds of reasons, from the climate to jobs, and from all across the United States. The available houses for all of Madison County, at present, is 225 homes, with only twenty-six under $300,000.

Corporate America investing in real estate instead of putting their money into saving accounts or investing in the stock market is another factor that will keep the trend of overpriced houses selling into the future. With real estate investments, a company can control their rate of income simply by raising rent, whereas, with stocks, bonds, and other savings accounts, the interest rates are controlled by the bank.  

I share this information to say, a reset will be hard to come by voluntarily, and, outside of added housing stock, there isn’t much hope that “supply and demand” will be a driving factor for a reset.  

Only time will tell if 2023 will see a recession or the needed reset on housing, building supplies, energy, and interest rates. The good news, according to Ms. Stewart, is that Madison County has an advantage with the amount of good-paying jobs and the high quality of life like roads, schools, and location. These advantages will insulate the county against a recession, at least in the foreseeable future. Good available jobs are why she moved to Mississippi from upstate New York seventeen years ago. Her family moved here because they knew there were plenty of jobs, and they wanted a change.  They stayed because they loved the climate and easily made friends in Mississippi.  

The climate and the hospitality of Mississippi is a given and, hopefully, the job market will continue to grow, so we can enjoy the best of times in full reality, not just political opinions.

EDITOR’S NOTE: Joy Foy is married to James Foy and is a retired Economic Developer with the Mississippi Development Authority. Foy is an active participant in the community of Canton. She is a member of the Canton Lions Club, the Keep Canton Beautiful Committee and the Canton Beautification Committee.