What will happen to the stock market in 2022? (Photo by Spencer Platt)
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The past year has been a volatile journey between all facets of life. As our happy world begins to accept the pandemic standard and government interventions rise, there are some educated predictions for what will happen in 2022.
Given the uncertainty of life since March 2020, there is a definite one about life: expecting the unexpected. With this awareness, the visions below may venture a long way off the mark, but today's financial market leans toward the next.
The Dow Jones will hit a record
Our economy will see continued growth and consumer spending as the world emerges and celebrates the life from which they were kidnapped due to social distancing and pandemic restrictions. This consumer confidence will stimulate strong corporate earnings. With this prediction, we can expect the Dow Jones to hit an all-time high and eclipse 38,000 for the first time.
International markets will prosper
National markets have performed better in recent years. In 2022, we can expect to see diversification as other asset classes outperform the United States. The combination of taxes and favorable conditions abroad will drive this international growth. As the overseas economic recovery continues to flourish, we can expect the dollar to continue to weaken.
There will be a nominal bond bounce
Over the past year, low interest rates coupled with expectations of federal rate hikes hurt bond market growth. In 2022 we will see an improvement in this market due to higher bond yields and the Fed's transparency on rate hikes.
Expect a maintenance of tax rates
While there has been considerable debate about raising taxes, there is a minimal chance of change. With the combination of Democratic resistance and the upcoming midterm elections, maximum tax rates will most likely return to 39.6% with minimal increases in capital gains.
Capitol Hill Will Shrink Crypto Market
Contrary to public belief, Capitol Hill will regulate blockchain technology and cryptocurrencies. This bitcoin explosion is inevitable as this Wild West currency has been operating "underground" and risking the stabilization of financial markets. This new public policy framework will likely cut the value of Bitcoin in half by the end of 2022.
The market will control inflation
As if the world didn't have enough to worry about, inflation has been the most anticipated topic of 2021. With consumers worrying about dramatic increases, we expect a more manageable increase in line with the Fed's 2-3% target. .
Supply chain problems will ease
Ships from the California coast will come ashore. As people return to the workplace and the increased demand for storage of unnecessary items diminishes, we will see the normalization of the supply chain by the second half of 2022. So plan a Christmas in July, as most of electronics and other consumer goods that require chips will now do so. be available for purchase.
An increase in interest rates
The Federal Reserve intends to raise interest rates in 2022. As the economy continues to recover, we can expect interest rates to increase by a quarter of a percentage point by the end of the year.
Employment problems will continue
Unemployment will endure as accommodative policies decline and the remote work environment will remain the norm. Even though employers are raising wages, unemployment is likely to continue to hover in the 4-5% range throughout 2022.
Mortgage rates will increase
The housing market has been booming as city dwellers moved to the suburbs and bought heavily overvalued homes at historically low interest rates. And while we've benefited from this boom, rates are likely to peak at 4% for a 30-year mortgage, which remains historically low.
Home purchases will cool off
Real estate agents will likely see less inventory in the housing market, which has been on fire for the past two years. Rising interest rates and the decline of a transient pandemic of panic will level housing market prices by around 3%.
Financially closing the end of the year
Like any prediction, the big question is the best expectation of all. So, like any year, continue to seek the advice of a financial advisor to monitor your investments and retirement planning. One certainty is that the pandemic reminded mere mortals of our human frailty. This acceptance is a strong drive for people to start living their best life with wealth, health and happiness in 2022.
