November brought investors some additional reprieve as the economy continued its bumpy transition to its next phase. Somewhat defying the Fed’s best efforts, much of the U.S. economic data released over the month was positive. Putting aside notable layoff headlines and a slight uptick in the unemployment rate, the overall labor market remained on solid footing supporting a resilient consumer. That said, higher rates have had a significant cooling effect on select areas of the economy, such as housing, where building activity and home sales fell dramatically. Overall inflation figures have shown signs of peaking, although shelter pricing has continued to rise. Somewhat paradoxically, shelter inflation could be further accelerated by the Fed’s actions and reduced new supply in certain areas. As we look forward to 2023, the markets will likely shift focus from containing inflation to the severity of a potential recession. Encouragingly, many asset prices have reset over the course of 2022 and may offer more compelling forward returns for long-term investors.

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