“Plotting” The Course For 2022
The economic expansion officially entered its 22nd month in February. In dog years, that translates to an age of 13—the same age the recovery might have reached this July if not for the COVID disruption. The late-cycle characteristics displayed by a recovery that’s statistically so young dissuade us from issuing a high-conviction forecast for 2022.
Regardless of one’s view on the maturity of today’s economic and market cycles, it’s hard to deny that the continuation of extraordinarily-loose economic policies is now causing those cycles to age prematurely. And no doubt it’s contributing to the premature “graying” of many market participants.
Deep Thoughts On The Recovery
Massive gains in stock market wealth have undoubtedly been a contributor to inflation, yet few analyses of the inflation picture even mention the stock market—other than to predict it will soar when inflation proves transitory.
Below “Stall Speed”?
The last few months have served up some of the strongest readings observed during the U.S. economic expansion.
How Will The Expansion End?
Debate over the timing of the eventual end of the economic expansion is centered almost entirely on Fed policy. How fast will the Fed lift short rates? How and when will it begin to contract its balance sheet? And will these moves invert the yield curve?