Welcome the Rabbit! The latest Chinese Lunar New Year commenced January 22nd, the Year of the Rabbit. To westerners, rabbits conjure up an image of a cute little animal hopping around eating lettuce and carrots, or a cunning cartoon character.  In Chinese culture, a rabbit is a gentle and clever animal symbolizing quiet confidence via relaxation, quietness and contemplation1,2. Quite a contrast to the exiting Year of the Tiger, full of energy and vigor.  

So far, these early weeks of 2023 seem to be more contemplative compared to the knee jerk reactions throughout 2022. Financial markets seem to be more cerebral as economic data is released and market indicators evolve. This is likely due to the status of the two primary worries: Federal Reserve’s interest rate hikes and signs of recession.  

During 2022, the Federal Reserve did not obfuscate their intention. The Federal Reserve was very open about battling inflation and returning to price stability. The problem in 2022 was inflation proved to be more potent and stubborn, which resulted in an intensely resolute Federal Reserve as 2022 progressed. The self-assertiveness and the changing landscape gave investors angst leading to incredible financial market swings. Fast forward to 2023, much of the interest rate increases are behind us with the Federal Reserve suggesting a pause in the near-term. Rightfully so, as inflation has clearly established a downward trend. Effectively, last year’s primary agitator has been taken off the table.   

Last year’s battle introduced a new risk; that of recession. This is what financial markets are immediately concerned with. Oddly, this is not a new concern as recession ponderings have enveloped the media for over a year as talking heads debated the ultimate consequences of aggressive rate hikes. Yet, recession fears have taken center stage as typical markers have become more prominent. These include 1) temporary jobs being cutback3, 2) layoff announcements picking up steam4, 3) consumer spending slowing3, 4) industrial production contracting3, and 5) weakening Leading Economic Indicators5 

It could be 2023 has begun with more level headedness as traditional economic data points are emulating historic norms leaving little to the imagination. Hence, markets can react to historically developed relationships as opposed to hyperbole and inuendo. Additionally, financial markets tend to front run the economic cycle. Meaning, financial markets have accepted recession as a base-case scenario and are looking to the next stage in the business cycle.  

Interesting how Chinese folklore recognizes that calm contemplation follows vigor and excitement similar to western culture recognizing a swinging pendulum.  Let’s hope the Rabbit fulfills its calling in 2023.

The opinions expressed are those of Heritage Financial and not necessarily those of Lincoln Financial Advisors Corp. Forward looking statements may be subject to certain risks and uncertainties.  Actual results, performance, or achievements may differ materially from those expressed or implied. 


2BBC, “Lunar New Year: What does the Year of the Rabbit signify in Chinese culture? 

3St. Louis Fed FRED Database   


5Conference Board