It’s hard to believe that there are only a few days left in 2021. How are you feeling about the coming year? Optimistic? Pessimistic? Uncertain? I would say yes to all of those.
My uncertainty stems mostly from the COVID-19 virus. We have spent 2021 slowly creeping out of our lockdowns and social distancing. Slowly our lives were beginning to feel more normal though not a day went by without wearing a mask somewhere and talking to someone about the latest COVID news. The Delta variant came along in 2021 as well as a new one, the Omicron variant. With cases around the world and here at home at some of the highest levels since this all started, will we be able to continue to open the economy more in 2022 or will people begin to pull back in? It’s uncertain what long term effect the pandemic has had on the economy. Jobs seem to be plentiful but no one wants to fill them. People seem to want to buy things, but they can’t get the merchandise. New and used cars are hard to come by. Appliances are back-ordered, and everything costs more; much more in a lot of cases.
My pessimism about 2022 lies in the direction the economy seems to be moving. We are seeing the highest inflation rates in the past 30 years and it is not transitory as the Fed, up until recently, has led us to believe. In order to fill job openings, it appears that employers are going to have to pay higher wages and better benefits. Wage inflation, if it gets too high, makes controlling the inflation rate very difficult, because unlike prices, which can be rolled back, wages generally aren’t decreased. Inflation in the late 1970’s was very high and to get rid of it the Fed had to raise interest rates to extremely high levels and that put the economy into a very bad recession in 1980-1982. I’m not predicting a recession in 2022, but the Fed recently concluded their December meetings and are laying the groundwork for up to three rate increases in 2022. The size of those increases is yet to be determined, but certainly any increase in rates will slow the economy. I’m a bit pessimistic that the Fed is behind the inflation curve and that three increases in 2022 may not be enough to bring the inflation beast under control.
I’m not easily discouraged and as I look at 2022, I’m optimistic about a lot of things. I think we will see progress in finding successful treatments and more effective vaccines for COVID. Even as I write this Pfizer had a treatment pill that in tests seems to be effective in reducing the severity of COVID if take within 3 to 5 days of the beginning of symptoms. I’m optimistic that we will find more and more solutions to our changing climate and those solutions will provide new products and jobs. I think we have learned one thing in the pandemic and that is we need to be more self sufficient and not so dependent in other countries around the world. So, I’m optimistic that some industries and jobs will be moving back to the U.S.
2022 won’t be a panacea. I’m also a realist and know that this is a big old world with unforeseen events and all we can really do is live each day as best as we can. So, I hope 2022 brings you much joy and happiness!