If 2021 was the year of over-the-top as the economy reopened — in spending, job growth, worker shortages, inflation and, yes, supply-chain bottlenecks — 2022 will be marked by a gradual return to normal, economists say.
Federal Reserve Chair Jerome Powell says the appearance of a new coronavirus variant could slow the economy and hiring, while also raising uncertainty about inflation. After hunkering down at the start of the COVID-19 pandemic, Darris Johnson splurged this year after he and his wife were fully vaccinated: They shelled out about $150 for a weekly dinner at a nice restaurant and several thousand dollars on new bicycles and accessories.
“There will be a rebalancing,” says Kathy Bostjancic, chief U.S. financial economist at Oxford Economics. As a result, Zandi has lowered his forecast for first-quarter economic growth from about 5% annualized to 2.2%. And both he and Bostjancic have cut their growth estimate for all of 2022 to about 4% from 4.4%.
She expects that to continue as the family moves to a new house with a swimming pool next month, a shift that will mean increased outlays for new furniture and pool upkeep. Robert Stehlik, who owns two surf shops on the island of Oahu in Hawaii, says his hiring plans are on hold until he sees how the pandemic plays out. Sales were roughly flat this year as sturdy demand from local customers offset the hit to tourism from the delta wave.
The result: A labor market that continues to leave workers with most of the bargaining power, a dynamic that generated record job openings and quitting in 2021 as employees bolted for higher-paying positions.
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