A big piece of the economic recovery story in 2021 was high\nand persistent inflation. Specifically, the highest rate of inflation the U.S.\neconomy has experienced in 30+ years.<\/p>\n\n\n\n
For the better part of the year, the Federal Reserve clung\nto the narrative that inflation was \u201ctransitory,\u201d signaling their view that\npressures would eventually ease. Instead, the pressures remained. By late\nNovember, the Fed was engaging in a form of damage control, removing the word\n\u201ctransitory\u201d from their inflation forecast and indicating a more rapid\nunwinding of QE. In the fall, the QE program was slated to end in June 2022. By\nthe end of November, the date had shifted to March 2022.<\/p>\n\n\n\n
In our view, the coming year should see prices stabilize, as\nconsumers increasingly shift purchases to services and as supply chain kinks\nget ironed out. However, it is possible \u2013 perhaps even likely \u2013 that price\npressures do not abate until the second half of next year, which may leave the\nFed no choice but to move up their forecast for interest rate increases. To\ndate, policymakers have been reluctant to raise rates during an ongoing\npandemic \u2013 but inflation pressures and a strong labor market may force their\nhand.1<\/sup><\/p>\n\n\n\n _____________________________________________________________________________<\/p>\n\n\n\n Is Trading Your Retirement Worth the Risk?<\/a><\/strong><\/p>\n\n\n\n If you\u2019re thinking about retirement planning in the new\nyear, we recommend thinking about how you would like to manage it. It\u2019s\ndifferent from managing your investments, and even if you\u2019re a smart investor,\ntrying to self-direct your retirement investments poses an extremely high risk!<\/p>\n\n\n\n So, instead of letting your emotions take control, try to\nfocus on the long-term outlook and the hard data. If you have $500,000 or more\nto invest, get our free guide, \u201cWhy Trading Your Own Retirement Can Be\nHazardous to Your Financial Health\u201d<\/em><\/strong>\u2014it offers some compelling\nreasons\u2014backed by facts and research\u2014why trading your retirement assets can be\nhazardous to your financial health.<\/p>\n\n\n\n This guide explores some of the key differences between trading\nand investing for retirement:<\/p>\n\n\n\n Download Your Copy of \u201cWhy Trading Your Own Retirement Can Be Hazardous to Your Financial Health.\u201d<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n _____________________________________________________________________________<\/p>\n\n\n\n While coverage of inflation and supply chains has largely\nremained negative, U.S. corporations have continued to brush off the challenges\nand post record profits. Impressively, corporations have posted record earnings\nin the last two quarters (Q2 and Q3 2021) even without the help of the leisure,\nhospitality, and travel industries. Companies in this space are still earning significantly\nless than they did in the pre-Covid period, and in fact, many of these\ncompanies aren\u2019t expected to get back to pre-Covid profitability levels for another\nyear at least. The key question in 2022 is whether spending will shift to\nservices and boost other areas of the economy, and\/or if inflationary pressures\nwill finally start to crimp margins for the to-date well-performing parts of\nthe earnings picture. The trend emerging from current consensus estimates (seen\nin the chart below) appears to show inflationary trends as indeed temporary\nwith little effect on earnings in 2022. Time will tell.3<\/sup><\/p>\n\n\n\n Labor shortages in 2021 were a major headline. Something to\nwatch in 2022 will be whether workers start to accept some of the 10 million\nunfilled job openings. As we write, some four million workers have yet to\nreturn to a job, for a variety of reasons \u2013 early retirement, lack of\nchildcare, persistent fear of Covid-19. Will the tides shift a bit in the new\nyear, in what could be one of the strongest jobs markets in U.S. history?\nAgain, this will be a factor for investors to watch in the new year. If the\njobs market strengthens further, it would arguably drive additional economic\ndemand in 2022, particularly since wages have been rising at a rate close to\ninflation. Personal consumption has risen by 12% since 2020, and the ratio of\ndisposable income to household net worth are close to a record high. Will\nconsumer finances improve even further in the new year, driving another year of\nstrong consumer demand? We think so.4<\/sup><\/p>\n\n\n\n In addition to these factors that can change the market at\nany given time, you might be wondering how you can better protect your\ninvestments in the new year. Especially for those preparing to retire \u2013 trying\nto manage your retirement assets could be very risky. Financial security is\nkey! <\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/pic1-3.png\")
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