Our 2022 Mid-Year Market Update

2022 has proved itself to be one of the most unpredictable years of this last decade. With a global pandemic still raging on in some parts of the world, a war in Ukraine, and an out-of-control housing market, there is good reason for many to have concerns about the state of the economy. 

While nobody can know for sure what will happen in the future, we’d like to take the time to reflect and review what’s happened so far in 2022 and what you can expect going forward.

Stock Market Performance

It’s no secret that the stock market has seen increased volatility in the last couple of months—partly due to the uncertainty surrounding the war in Ukraine and partly due to the continued effects of historically high levels of inflation. 

In the last 6 months, all three indices experienced significant declines: the S&P 500 fell 12%, the Nasdaq fell 23%, and the Dow fell nearly 8%. (1) Big tech stocks bore the brunt of the declines (2) as many experts wonder if the bubble surrounding this industry is about to pop.

This year has seen concerns regarding the global economy reach new highs as many countries struggle in different ways:

• The ongoing COVID-19 surge in China has prompted fresh rounds of lockdowns and stifled economic growth. (3)
• The possibility of nuclear war in the conflict between Russia and Ukraine has many worried. (4)
• High inflation in the U.S. is reducing demand for everyday goods and could send the economy into a recession. (5)

There’s no way to know exactly how all these events will unfold, but our best advice is to keep calm throughout the storm. Stock market volatility, and even recessions, are normal parts of the economic cycle, and sticking with a tried-and-true investment strategy is the best way to navigate uncertain times.

Employment Levels

Employment levels have steadily been returning to pre-pandemic numbers, with the May 2022 unemployment rate remaining at 3.6%, unchanged from April. This number, about 6 million people, is similar to the February 2020 pre-pandemic rate of 3.5%, or 5.7 million people. (6)

The payroll employment sector also saw an increase of 390,000 jobs in May, adding gains to the leisure and hospitality, professional services, retail, and manufacturing industries. (7) With these revisions, employment in February and March combined is 39,000 lower than previously reported, suggesting to many experts that the economy as a whole will continue to grow despite high inflation.

Interest Rates and the Federal Reserve

In response to surging inflation, the Federal Reserve raised interest rates by .25% in March and then by .50% in May, which marked the single largest rate hike since 2000 (8) and the first rate hike since December 2018. (9) The Fed has promised to raise rates throughout the remainder of 2022.

There is much debate over how much rates should rise in order to effectively combat inflation. Too much of a rise could halt economic recovery, whereas too little could keep inflation rampant and send the economy into a recession. Many experts agree that the Fed still needs to do more to combat inflation. (10)

What Does This Mean for You? 

Although we can’t fully know what lies ahead, don’t let that prevent you from taking the steps to protect yourself and pursue financial freedom. The Rosamond Financial Group can help you navigate your financial challenges and opportunities with confidence. To learn more about our 2022 outlook and how we can help you, book a free introductory meeting online! You may also call our office at 830-798-9400 or email smrosamond@rosamondfinancialgroup.com.

About Preston

Preston Rosamond is a financial advisor and the founder of The Rosamond Financial Group Wealth Management, LLC with nearly two decades of industry experience. He provides comprehensive wealth management and financial services to individuals, professionals, and families who enjoy simplicity and seek a professional to help them pursue their goals. Preston personally serves his clients with an individual touch, a sincere heart, and his servant’s attitude is evident from the moment you meet him. Learn more about Preston or start the conversation about your finances with him by emailing smrosamond@rosamondfinancialgroup.com or schedule a call with our online calendar.

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(1) https://www.google.com/finance/?hl=en
(2) https://money.com/why-are-tech-stocks-down-2022/
(3) https://www.reuters.com/world/china/chinas-widening-covid-curbs-exact-mounting-economic-toll-2022-04-06/
(4) https://www.cnbc.com/2022/04/26/russia-ukraine-live-updates.html
(5) https://www.theatlantic.com/ideas/archive/2022/03/inflation-federal-reserve-recession/627079/
(6) https://www.bls.gov/news.release/empsit.nr0.htm
(7) https://www.bls.gov/news.release/empsit.nr0.htm
(8) https://www.wsj.com/livecoverage/federal-reserve-meeting-inflation-rate-may-2022
(9) https://www.cnbc.com/2022/03/16/federal-reserve-meeting.html
(10) https://www.reuters.com/business/finance/feds-racing-raise-rates-how-high-remains-an-open-bid-2022-04-28/