It has been a confusing year for the economy and markets. In early 2023, economists largely predicted a global recession, and Wall Street was bearish on stocks, with many analysts expecting the S&P 500 to finish the year just slightly higher than where it started. One year later: There’s no recession (yet) and the S&P 500 is tantalizingly close to an all-time high.

Here are 11 charts that help explain how we got here.

central bankers worldwide An aggressive campaign of interest rate increases continued. in 2023, raising policy rates in an effort to rein in the highest inflation in generations.

Inflation has cooled considerably in many places, although it remains above the Federal Reserve’s target (about 2 percent), and rate increases have paused. The question is how long central banks will need to keep rates high to ensure inflation is under control without halting economic growth.

These losses only become real if the banks have to sell the assets. Before its implosion, SVB was forced to do just that: dump its bonds at a steep discount to pay depositors. Those losses set off alarm bells, prompting more customers to demand their money back (a classic bank run) and raising concerns about unrealized losses at other regional banks.

Higher interest rates also raised the cost of borrowing for consumers and businesses, impacting the entire economy, especially the commercial real estate sector.

A series of macroeconomic data in the United States suggested cause for celebration: Unemployment remained low and GDP grew rapidly this year. In 2020, wage growth far exceeded inflation largely due to pandemic distortions. That trend returned this year as wage growth outpaced inflation for the first time since the post-coronavirus economic recovery began in the second half of 2020.

What is the reason for the disconnection? Persistently high prices? Recession fears? The “vibecession”? Whatever the explanation, voters’ feelings about the economy (and President Biden’s handling of it) could potentially be decisive in the 2024 election.

The “Barbenheimer” weekend closely followed a strike by tens of thousands of actors. They joined the screenwriters on the picket line in July to stop Hollywood.

The strikes were part of a wave of labor activity in the United States this year, including selective strikes by the United Automobile Workers union. Despite the recent rebound, overall union activity has fallen since the 1970s and 1980s.

Two wars have highlighted the fragility of the global economic recovery and reconfigured the world’s trade relations.

A good example: the geopolitics of oil. Prices soared above $120 a barrel after Russia’s invasion of Ukraine in 2022, then fell steadily amid rising U.S. oil production and signs of a global economic slowdown. The war between Israel and Hamas raised new fears that oil prices would rise and reignite inflation. Despite maritime problems in the Red Sea and the Suez Canal, those concerns have yet to materialize.

In the war between Russia and Ukraine, India and China have emerged as key beneficiaries. India, taking advantage of its neutrality, went from barely buying Russian oil to buying nearly half of what the country exports by sea. Trade between China and Russia has also increased, surpassing $200 billion in the first 11 months of this year.

Tensions between the United States and China appear to have stabilized after President Biden’s meeting with President Xi Jinping of China on the sidelines of the Asia-Pacific Economic Cooperation Forum. summit in November.

Economic ties remain strong, and new research shows how difficult it is to undo them. Tariffs imposed by the Trump administration and other trade restrictions have caused China’s share of exports to the United States to fall in recent years, while countries such as Mexico and Vietnam have gained ground.

But those countries import intermediate goods from China, meaning American supply chains remain dependent on Chinese production. In fact, China is now the dominant supplier of industrial inputs, according to calculations in a recent article.

Another reason why the United States cannot easily “decouple” from China: semiconductors. China is a major market for these advanced computer chips, which can be used to power artificial intelligence systems. This fall, the Biden administration tightened its export controls on semiconductors, making it harder for American companies to sell them to China. To comply with the restrictions, large chip makers like Nvidia are already working on modified chips to sell in Chinese markets.

This year saw an explosion of investment in generative AI startups, including Microsoft’s $10 billion backing of OpenAI, announced in January. Since then, Microsoft’s relationship with OpenAI has come under scrutiny, particularly its role in reinstating Sam Altman as CEO of OpenAI after a board coup that sparked a chaotic five days at startup. On December 27, The New York Times became the first major American media organization to sue OpenAI and Microsoft over AI-related copyright issues, stating in the lawsuit that the companies should be held responsible for the “ illegal copying and use of exclusive Times material.” valuable works.”

Despite this, investment in this area of ​​technology is booming.

Microsoft and Nvidia, the chipmaker, are two of the “Magnificent Seven” tech stocks that contributed to this year’s stock market rally.

As the year wound down, the S&P 500 continued a bull market rally that surprised many on Wall Street.

How long will it last? That’s a question for the next 12 months.