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2022 Annual Market Outlook
We are at the point in the U.S. where there is no end to the spending game. The Federal Reserve must continue to play a heavy hand in the business cycle by printing money to combat asset price declines and using communication and gradual tightening measures when the economy runs too hot. Looking at the three most recent cycles, it appears that the Fed moves full circle in about 2-4 years. These cycles used to last eight years.
Last year saw valuations stay elevated globally, trends continue their positive momentum through varying areas of leadership, and economic growth surge in the U.S. The math gets tricky for the U.S. as we enter 2022. When analyzing year-over-year percentage growth trends, it is pretty easy to see that growth will likely slow considerably in the first half of the year.
Inflation also seems likely to continue through the end of next year. Meanwhile, the Federal Reserve is discussing a tightening path that involves ending the monthly purchases of assets and eventually raising rates next year. In summary, the Fed is going to tighten into a slowdown.