The first half of 2022 mercilessly ended last week. The S&P 500 was down approximately 20%, the worst opening six months for this index since 1970. The NASDAQ was off some 30% while the small cap Russell 2000 fell roughly 25%.
Stocks crumbled throughout the first half of the year thanks to the highest inflation levels since the early 80s, record gas and diesel prices, horrid consumer sentiment and rising interest rates. The war in Ukraine only added to those woes and this conflict is likely to drag on for at least the end of the year and no serious peace talks are currently ongoing.
So what will the second half of 2022 bring for battered investors? 3 predictions are highlighted below.
Recessionary Fears Turn out to be Well Founded:
The U.S. Administration and other government officials keep stating that a recession is not 'inevitable'. Unfortunately, many of these same officials were articulating inflation was going to be 'temporary' and 'transitionary' as 2022 commenced as well. They look like they will be just as prescient this time around.
The fact is that for most consumers, the recession has already started. With wage growth running five to six percent annually and inflation running north of eight percent, the average consumer has lost buying power for 15 straight months. This has depleted savings as the average savings rate is now back under five percent, the lowest since 2008.
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