The Facts, The Feelings, and The Future: 2023 Product Development Recap and 2024 Outlook
2023 was a challenging year for many, especially for those of us that work in the tech industry. Whether you were grappling with high mortgage interest rates, or suddenly found yourself without a job, we’re all feeling it personally and professionally. However, there are reasons to be optimistic about 2024.
In this blog post, Crafted’s Founder & CEO Adam Oliver and CTO Ryan Trunck take a close look at the 2023 economic reality and how consumers (including us) feel. And while we acknowledge and understand that this year has been hard on a lot of us, we aren’t here to pile onto the negativity. Instead, we’ll share what we’re most excited about in 2024, including some positive economic signs and continued advancements in tech, such as artificial intelligence (AI) and machine learning (ML).
The Facts
TL;DR: The economic gloom doesn't reflect the economic reality.
Before we get into how people are feeling about the current state of the economy and projections for next year, let’s take a quick look at the 2023 economic snapshot.
Current Interest Rates
(As of 12/18/23)
Current federal reserve interest rate (5.33%) is more than double what we saw pre-pandemic (2.16%), but inflation has cooled down (currently 3.1%)
While mortgage interest rates are the highest they’ve been in 20 years, rates have been steadily dropping since October 2023 (nearly 8%) and are currently at 6.23% 30-yr FRM
Though there have been 200,000+ layoffs in tech this year, the unemployment rate (currently 3.7%) has continued to decline since 2020 (8.05%) and 2021 (5.35%)
Stock Market Data
The S&P 500 posted a total return of 21% for the year, which is well above its average annual return of 10%
The tech-heavy Nasdaq Composite has gained around 37% in 2023
The blue chip Dow Jones Industrial Average is up about 12% on the year
The Feelings: Consumers
TL;DR: The pandemic and constant access to bad news has left us feeling really down, but consumer sentiment is turning a corner and people are becoming more optimistic about next year.
To better understand why people have been feeling so down the last few years—even as the economic situation has started to improve lately—we’re going to take a closer look at the Consumer Sentiment Index.
What is it? The University of Michigan surveys consumers on the current conditions and future expectations of the economy
What is the Index currently (Dec ‘23)? 69.4
What was the Index last month (Nov ‘23)? 61.3
How do we interpret these numbers?
We hit 61.3 during the Great Recession
The last few years of the Index look a lot like the late 1970s/early ‘80s when…
Inflation was 13.5%, compared to 3.1% now (even at its worst in the last three years it was 9.1% in 2022)
Unemployment was 10.8%, compared to 3.7% now
Why has Consumer Sentiment been so low?
Smartphones give us non-stop access to bad news (think “doomscrolling”)
We are in a very polarized time politically and it's weighing on people
The end of pandemic-era economic relief (three rounds of stimulus checks, pause in student loan payments, and expansion to the Child Tax Credit)
Cheer up! Consumer Sentiment is on the rise
Sentiment is now about 39% above the all-time low measured in June 2022
24% surge in both the short and long-run outlook for business conditions
The Feelings: Crafted
TL;DR: Tech companies have been forced to do more with less and really focus, but AI/ML is all the rage and is driving new investments despite economic uncertainty.
As the Founder & CEO and CTO of a product development consultancy, what is our take on all of this?
Business Observations
There is a lack of resources (money and people) due to curbed investment dollars and fewer IPOs
Product development teams are thus overwhelmed with their current roadmaps, resulting in more products of lower quality or fewer products of higher quality
Executive teams and product development teams have needed to collaborate and iterate on roadmaps and make more data-driven decisions
Technology Observations
AI/ML is all the rage and is driving new investments despite economic uncertainty (for example, look at the Nvidia explosion and OpenAI being the fastest consumer internet app to reach 100 million users)
The data center is the new unit of computing, capable of training massive neural networks, and Nvidia is creating ways for data centers to run faster and cheaper
Companies are succeeding and industries are transforming by monetizing AI/ML, and we’ve built some models ourselves:
Trained a NLP model based on spaCy to perform Named Entity Recognition to identify specific relationships between unstructured text content for a client (TributeTech)
Fine-tuned a Stable Diffusion model with pictures of Crafted’s CEO (Adam Oliver) to enable employees to prompt the model via Slack to generate fun and ridiculous photos
There’s more scrutiny on inefficiencies, such as those caused by legacy technology; legacy tech can also inhibit teams from delivering on AI/ML, so the time to modernize really is now
The Future
TL;DR: While the economic outlook gets brighter by the day, you can’t afford to wait to modernize your technology, take advantage of AI/ML, or improve your product development processes to deliver value fast.
So what are our predictions for next year and how can Crafted help you be successful in 2024 and beyond?
While your 2024 product development budgets are likely still tight and conservative, lowering inflation and the buzz around the fed likely cutting interest rates has people optimistic
Don’t stall your innovation until then! As you prepare to rehire your workforce and expand your roadmap, Crafted can be the burst of steroids your company needs to move quickly and build a foundation for scale
Speed to market will be more important than ever, and requires a highly collaborative approach between product, sales, marketing, and stakeholders
Get the right people in place and start practicing tight-knit collaboration now! Crafted’s Balanced Teams approach will ensure that together, product design, product management, and engineering can deliver high-value, quality software fast
AI/ML will continue to be a huge focus in 2024, and companies that don’t start taking advantage of it will fall behind
Start preparing to take full advantage of AI/ML now! We can ensure your tech and product development practices are in order and even help you get your data ready for executing on an AI/ML strategy
Conclusion
2023 has been a challenging year, and Crafted has had friends, family, and clients feel the effects firsthand. If you’ve had to make tough decisions this year or are still struggling to find employment, we empathize with you.
That being said, we are excited about all of the signs that point to a fresh start in 2024, and we are here for you if you’re ready to start changing the future of your business now. To a happy, healthy, and productive new year!