Brian Andrew
Chief Investment Officer | Johnson Financial Group
As Chief Investment Officer, Brian Andrew leads Johnson Financial Group's investment strategy to provide consistent, actionable investment solutions for our clients.
Markets and Economy
2022 Mid-Year Economic & Market Outlook
2 minute read time
Executive Summary
With hindsight we should be unsurprised we’d have a different sort of recovery given the circumstances surrounding the pandemic. The sharp decline in economic activity when parts of the economy were shut down was followed by a tidal wave of demand as the economy reopened. Supply chains were unprepared for the surge in demand bolstered by unprecedented monetary and fiscal policy support. Add a war in a region that supplies food and energy to much of the world and you have a recipe for high inflation.
The consequences of high inflation led to high volatility in financial markets as investors reprice assets for the new environment. Bond prices have declined at one of the fastest rates in history, because interest rates are rising from such a low level. Interest rates are moving higher after reaching historic low levels during the pandemic. Stock prices are adjusting from a Goldilocks period a year ago with ample demand and low interest rates to a period of high uncertainty surrounding earnings given slowing economic growth and high inflation.
While volatility will be with us for the foreseeable future, we are confident the economy, companies and markets will adjust to the new environment as they have in the past.
The Economy
- Economic growth is slowing after the post-pandemic reopening boom. While recession risks are rising, economists expect real gross domestic product (GDP) growth of 2.6% in 2022 after the 5.7% boom in 2021. Note this is similar to the long-term average before the pandemic began.
- Inflation appears to be in the process of peaking. We expect the rate of inflation to gradually decline over the next year, although the level may remain above the Fed’s 2% target for years.
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This information is for educational and illustrative purposes only and should not be used or construed as financial advice, an offer to sell, a solicitation, an offer to buy or a recommendation for any security. Opinions expressed herein are as of the date of this report and do not necessarily represent the views of Johnson Financial Group and/or its affiliates. Johnson Financial Group and/or its affiliates may issue reports or have opinions that are inconsistent with this report. Johnson Financial Group and/or its affiliates do not warrant the accuracy or completeness of information contained herein. Such information is subject to change without notice and is not intended to influence your investment decisions. Johnson Financial Group and/or its affiliates do not provide legal or tax advice to clients. You should review your particular circumstances with your independent legal and tax advisors. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared. Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. Certain investments, like real estate, equity investments and fixed income securities, carry a certain degree of risk and may not be suitable for all investors. An investor could lose all or a substantial amount of his or her investment. Johnson Financial Group is the parent company of Johnson Bank and Johnson Wealth Inc. NOT FDIC INSURED * NO BANK GUARANTEE * MAY LOSE VALUE
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