As we are already into the second quarter of 2023, some predictions from my 2023 outlook, published back in early December 2022, are worth checking out. This week, in Part I, we will focus on what is “on track.” Next week, in Part II, we will look into what is “off track.”
As stated back in March of 2022, I continue to believe that short-term interest rates will reach 6.0% before year end. As a result, the level of income that can be generated on “all cash” can mean hundreds of thousands to millions in additional dollars to your entity’s bottom line.
Inflation, which is currently at 5%, is right within the target that was outlined in my December 2022 forecast. Despite concerns with some of the regional banks’ financial challenges, inflation will continue to be the primary focus of the Federal Reserve Board, which will also put pressure towards rising short-term rates.
I continue to believe that the U.S. economy will not enter a recession, but will be rather anemic, causing the markets to predict a cut in interest rates; the cuts will not happen this year or in 2024. Short-term rates will remain higher, however, and for a longer period of time than expected.
The highlight of these predictions is for public entities to be more proactive in the liquidity management of all cash. Cash should be considered as an asset that can significantly impact this year’s budget in a very positive way. And 2024’s as well.
2023 remains the year of “cash.”