House sellers had an easy time selling their houses in 2021, but buyers had a hard time finding them. While stocks rose like the housing market, employers struggled to retain staff, and millions of people quit jobs that they would have been satisfied with had they been hired one year earlier.
We can focus on the economy of tomorrow after a wild and unpredictable year. As stated on Yahoo, experts discussed what changes are predicted for 2022 with GOBankingRates.
Hot Markets in Housing and Finance are Likely to Cool Off
Ratezip.com founder Paul Knag is a duly licensed mortgage agent in 26 states, an expert in generating marketing leads.
With his predictions of the economy for 2022, he is incredibly concise.
“I believe that a hawkish Fed combined with Omicron uncertainty could bring higher interest rates amid domestic hardship, cooling-off home values and putting pressure on stock and crypto markets in 2022,” Knag stated.
His points are backed up by plenty of data.
After a year in which house prices rose more rapidly than at any time in U.S. history, Fortune reports that homebuyers are finally starting to get a break. The cooling off is expected to continue through the year, with Redfin projecting a growth of just 3% for December 2022, compared to 19.5% in 2021.
As for the “Omicron uncertainty” Knag discussed in relation to the stock and crypto markets, COVID variants are exactly what Bank of America identified as a primary risk to financial markets in 2022 in a recent report.
Halfway Through the Year, Inflation Should Begin to Decline
An increase in prices was one of the defining features of the economy of 2021 – but will the dollar’s purchasing power depreciate even more in 2022?
“I don’t see inflation ending anytime soon,” noted Luke Zhang, a financial expert and cofounder of Dunk or Three.
“With the lack of workers and a shortage of supplies, it’s clear that inflation will continue to be an issue well into 2022.”
It remains to be seen whether “well into” 2022 will be possible. Inflation is predicted to drop from 5.1% to 2.3% by the end of 2022 by the National Institute of Economic and Social Research.
In the future, it’s safe to assume that prices will rise for another six months or so, according to Tenpao Lee, professor emeritus of economics and faculty director at Niagara University.
“We will have significant inflation in the first half of 2022 until the supply chain issues are resolved and the global economy is restructured,” said Lee.
As America’s New China Policy Unfolds, the World Will Learn its Outcome
Continuing with his remarks about global economic restructuring, Lee explained that “the USA will be continuously challenged by China,” in the coming year, saying that, “I hope both countries will benefit with cooperation rather than hurting each other with destructive competition.”
Wishful thinking might not be the only possibility.
Earlier this year, The Diplomat reported on the distinction between the new government’s tone and policies and the previous administration’s. In the publication, it’s described as a shift from offensive competition to “responsible” competition that is collaborative when possible and adversarial only when necessary.
By 2022, the results of the Biden administration’s shift will be evident, but dialing back tension might have unexpected consequences.
“In its latest risk outlook report, the EIU notes that the U.S. and China are vying for global influence,” Olivia Tan, founder of CocoFax and a Florida-based financial coach, said.
“In an extreme scenario, this could lead to a neutral stance becoming economically prohibitive for third countries, dividing China-supporting and U.S.-supporting economies. Full global economic bifurcation would force companies to operate two supply chains with different technological standards.”
There May Be a Great Raise After the Great Resignation
It is thought that the Great Resignation started in April is directly linked to the virus, and the mass exodus from the workplace will also fade as the virus recedes.
“As the pandemic diminishes, gradually, the job market will move back to normal, and the unemployment rate will be around 4%,” Lee explained.
However, the paychecks could be much bigger.
Digital Roofing Solutions founder Zach Blenkinsopp is intimately acquainted with the labor issues that dominated the economy of 2021.
“The job market is now in favor of employees rather than employers and this is their chance to make a stand and demand better rates in these difficult times,” Blenkinsopp explained.
“The added burden on employees as more of their colleagues leave the workforce has strained employees’ professional and personal lives. This added strain is creating a vicious cycle that is driving more employees to quit their jobs. Inflation is making life even more expensive for everyone, and employers who increase their remuneration rates will attract more potential employees.”
The increased remuneration is even labeled with an exciting name by him.
“The Great Raise will be adopted by numerous organizations seeking to retain their core employees and attract more talent,” Blenkinsopp said.
Robots Might Just Take Over the Jobs
Increasing employee demands for higher pay and better benefits have proven to be difficult for many businesses to keep up with. It is likely that businesses will respond to the Great Resignation in 2022 with the Great Automation in order to save money on labor and prepare for future worker uprisings.
“The primary cause of inflation is the lack of labor supply and lower-than-usual labor force participation rate,” said CPA Zach Reece. In 2022 and the years to come, this will be the defining challenge.
“I expect that this will accelerate the adoption of automation and artificial intelligence because if we can’t get people to work, we have no choice but to use robots and technology to do the work.”