Geopolitical tensions, energy market imbalances, persistently high inflation numbers and rising interest rates have many investors and economists concerned that a U.S. recession is inevitable in 2023.

Recession risk has been rising throughout 2022 as the Federal Reserve has raised interest rates in its ongoing battle against inflation. The good news for investors is that the U.S. economy has remained relatively strong up to this point. Unfortunately, the higher interest rates rise, the less likely the Fed will be able to navigate a so-called soft landing for the economy in 2023.

Economic recessions are no reason for panic and have been a regular occurrence over the past century. However, investors can make the most of a difficult situation by knowing which risk factors to watch and how to position their portfolios to optimize their performance if a recession is looming in 2023