{"id":10120,"date":"2022-01-25T17:33:24","date_gmt":"2022-01-25T17:33:24","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=10120"},"modified":"2022-02-26T13:05:36","modified_gmt":"2022-02-26T13:05:36","slug":"how-will-omicron-impact-the-economy-in-2022","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/how-will-omicron-impact-the-economy-in-2022\/","title":{"rendered":"How Will Omicron Impact the Economy in 2022?"},"content":{"rendered":"\n<p>The rapid spread of the Omicron variant has many worried\nabout the impact on economic growth. The World Bank released a forecast last\nweek stating that additional supply-chain disruptions, labor shortages, and the\nreduction in fiscal support would slow global growth to 4.1% in 2022 from 5.5%\nlast year. For the U.S., GDP growth is forecast to slow to 3.7% in 2022 from\n5.6% in 2021. China could see the biggest dent, with GDP growth falling to 5.1%\nin 2022 from 8% in 2022.<sup>1<\/sup><\/p>\n\n\n\n<p>These growth forecasts are all lower than they were just\nthree months ago.<\/p>\n\n\n\n<p>__________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2022_01_24&amp;content=stock_market_outlook_report \">What Do These Economic Forecasts Mean For Your Investments? <\/a><\/strong><\/p>\n\n\n\n<p>We\u2019re in year three of the pandemic \u2013 what should you do\nwith your investments now? As the Omicron surges again, it\u2019s normal to feel\nworried and questionable about your portfolio.<\/p>\n\n\n\n<p>Yes, the surge could put a dent in economic growth, but your\ninvestments can stay protected! Let us help you focus on factors that can\nimpact your financial future regardless of the state of the market, instead of\nbasing your decisions on \u201cwhat-if\u2019s.\u201d<\/p>\n\n\n\n<p>Instead of worrying, we are offering all readers\na look into our just-released&nbsp;<strong>February\n2022 Stock Market Outlook report <\/strong>to\nguide you<strong>.<\/strong> This report will provide\nyou with our forecasts along with additional factors to consider:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Zacks rank S&amp;P 500 sector picks<\/em><\/li><li><em>Zacks view on equity markets<\/em><\/li><li><em>What produces optimism in 2022?<\/em><\/li><li><em>Zacks forecasts for 2022<\/em><\/li><li><em>Zacks ranks industry tables<\/em><\/li><li><em>Sell-side and buy-side consensus<\/em><\/li><li><em>And much more<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0<br> <br><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2022_01_24&amp;content=stock_market_outlook_report \">IT&#8217;S FREE. Download the Just-Released February 2022 Stock Market Outlook<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2022_01_24&amp;content=stock_market_outlook_report \">2<\/a><\/sup><\/strong><\/p>\n\n\n\n<p>______________________________________________________________________________<\/p>\n\n\n\n<p>I will get into some of the reasons for these falling\neconomic forecasts below. But let me give readers the bottom line first: the\nWorld Bank, International Monetary Fund, and other forecasting institutions \u2013 such\nas the Congressional Budget Office and even the Federal Reserve \u2013 are <em>almost\nalways wrong<\/em>. When forecasts grow more bleak or pessimistic, that is\nusually a reason to be hopeful, in my view. If growth outperforms expectations,\nthat is generally good news for stocks.<\/p>\n\n\n\n<p>The spread of the Omicron variant is certainly not helping\nthe economic expansion, but here is the real question: Is Omicron hurting the\nexpansion as much as forecasters think it is?<\/p>\n\n\n\n<p>According to the World Bank, the latest disruptions have\nsunk international trade by 8.4% and industrial production by 6.9%, compared to\nwhere those figures should have been absent Covid-19. Yet as of mid-2021,\nglobal trade was already 5% higher than it was in December 2019, before the\npandemic arrived. In my view, this recovery in trade is better than just about\nanyone expected it to be, which again may help explain the stock market\u2019s\nresiliency throughout this period.<\/p>\n\n\n\n<p>China is also a growing concern in the current environment.\nChina is still pursuing a zero Covid-19 strategy, and flare-ups recently have\nled to harsh restrictions and mass testing on a scale not seen since the\nbeginning of the pandemic. Some major manufacturers have shuttered factories, and\nworkers have been in short supply due to restrictions in various provinces.\nMajor multinational corporations like Nike, Volkswagen, and Samsung have\nalready reported production snags that could impact inventories and sales.<\/p>\n\n\n\n<p>The worry is that China\u2019s reduced production capacity could\nresult in further damage to an already compromised global supply chain,\nespecially given how much the world relies on Chinese exports. To put this in\nperspective, China\u2019s trade surplus is expected to have hit a record high in\n2021. <\/p>\n\n\n\n<p>It\u2019s not all bad news, however.<\/p>\n\n\n\n<p>The World Bank is also projecting that some economies are\nlikely to strengthen in 2022, particularly those that were impacted most during\nthe earlier phases of the pandemic. Among those expected to see stronger growth\nfrom 2021 are countries like Indonesia, Thailand, Malaysia, and Vietnam, all of\nwhich are emerging factory and manufacturing powerhouses that have learned how\nto navigate the pandemic without instituting full economic shutdowns.<\/p>\n\n\n\n<p>The World Bank also offered a silver lining to the potential\neconomic issues brought on by Omicron, in stating that supply bottlenecks and\nlabor shortages should ease throughout the new year and that inflation and\ncommodity prices should also come down in the second half. <\/p>\n\n\n\n<p><strong>Bottom Line for\nInvestors <\/strong><\/p>\n\n\n\n<p>For the most part, people are drawn to negative news stories\nor those with a pessimistic bent. So when an organization like the World Bank\nissues forecasts that stress risk and call for falling economic growth rates,\nit usually grabs our attention. No matter that the World Bank and other\nforecasters are almost always wrong.<\/p>\n\n\n\n<p>Case-in-point: a year ago, the World Bank forecast global\neconomic growth of 4% in 2021, but the actual growth rate is estimated to be\ncloser to 5.5%. That may not seem like a big miss, but it actually means the\nWorld Bank missed by over 25%. That\u2019s significant.<\/p>\n\n\n\n<p>In 2022, the World Bank is calling for an \u201cincreased risk of\na hard landing\u201d for the global economy. Similarly, the World Economic Forum\u2019s\nannual risk report said that 84% of business leaders and experts were concerned\nabout the growth outlook for 2022, while only 4% were optimistic. For\ninvestors, I think it\u2019s important to take these negative outlooks as positive\nnews: if growth outperforms even by just a little, that is usually all the\nsupport stocks need.<\/p>\n\n\n\n<p>We cannot predict the future state of the market, however, we can be ready for it! Investors who are looking for long-term financial growth have to focus on factors that weather through the market highs and lows. We are offering all readers our\u00a0<strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2022_01_24&amp;content=stock_market_outlook_report \">Just-Released February 2022 Stock Market Outlook Report.<\/a><\/strong><\/p>\n\n\n\n<p>You\u2019ll discover Zacks\u2019 view on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Zacks rank S&amp;P 500 sector picks<\/em><\/li><li><em>Zacks view on equity markets<\/em><\/li><li><em>What produces optimism in 2022?<\/em><\/li><li><em>Zacks forecasts for 2022<\/em><\/li><li><em>Zacks ranks industry tables<\/em><\/li><li><em>Sell-side and buy-side consensus<\/em><\/li><li><em>And much more<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!<br><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Despite dire predictions from the World Bank and others, there are reasons for optimism in the year ahead.<\/p>\n","protected":false},"author":3,"featured_media":8874,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-10120","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10120","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=10120"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10120\/revisions"}],"predecessor-version":[{"id":10213,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10120\/revisions\/10213"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=10120"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=10120"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=10120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}