2021 brought the US economy one of its best years of growth in nearly 40 years, bouncing back from one of its worst in 2020. A combination of record stimulus, healthy consumers, an accommodating Federal Reserve, vaccinations, and reopening of businesses all contributed to the economy's big year.
This year, the economy may be ready to put greater emphasis back on the individual choices of households and businesses. How smoothly this transition goes may very well determine the course of its recovery.
Here's a brief overview of what we forecast 2022 to look like:
Economy. Fiscal and monetary policies played big roles in the economic recovery in 2021, but we see 2022 making the transition from stimulus bridging a pandemic-driven recovery, to an economy growing firmly on its own. We anticipate consumers, productivity, small businesses, and capital investments to all play a part in the next stage of economic growth.
Stocks. We expect solid economic and earnings growth to help US stocks deliver additional gains in 2022. Since we believe we are currently approaching the middle of an economic cycle, the chances of another good year for stocks are quite high.
Bonds. We expect interest rates to move modestly higher in 2022 based on a couple of factors: near-term inflation expectations above historical trends, and improving growth expectations once the impact of the COVID-19 variants recede.
While mid-cycle years aren’t quite as exciting as others, they do tend to strike a nice balance between risk and opportunity.
As always, we remind you to maintain a long-term perspective and focus on what you can control: making sure your portfolio is well-balanced and tailored to your goals and financial situation. Please don't hesitate to call our office at (518) 584-2555 if you have any questions or concerns.