Our 2022 Mid-Year Market Update
By Tyson Farmer
After two long years of especially frightening headlines and large-scale global events, uncertainty has become the name of the game. We’ve endured the ongoing COVID-19 pandemic and witnessed a war in Ukraine and rampant inflation. Because of all this, there is good reason for many to have concerns about the state of the economy.
While there are still many unknowns, let’s take some 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 six months, all three indices experienced significant declines: the S&P 500 fell almost 18%, the Nasdaq fell more than 17%, and the Dow fell nearly 14%. (1) Big tech stocks bore the brunt of the declines, (2) forcing experts to wonder if the bubble surrounding the tech 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 war in Ukraine has triggered a global food shortage, as Ukraine and Russia provide a combined 19.1% of the world’s grains. (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 June unemployment rate remaining at 3.6%, unchanged from May. 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 372,000 jobs in June, adding gains to the leisure and hospitality, professional services, retail, and healthcare industries. (7) These figures are higher than the 286,000 new jobs expected, suggesting to many experts that the economy as a whole will continue to grow despite high inflation. (8)
Interest Rates and the Federal Reserve
In response to surging inflation, the Federal Reserve raised interest rates by 0.50% in May and then by 0.75% in June, which marked the single largest rate hike since 1994. (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. At Vega Financial, we help you navigate your financial challenges and opportunities with confidence. To learn more about our 2022 outlook and how we help you, schedule an introductory phone call by reaching out to us at tyson@vega-financial.com or 206-883-8342.
About Tyson
Tyson Farmer is the founder and a financial advisor at Vega Financial, an independent financial advisory firm making a difference by providing clients proactive planning, objective guidance, and a well-organized financial life. With over 16 years of experience, Tyson strives to build strong, long-lasting relationships with his clients so he can help them build plans based on their needs, desires, and goals. Tyson is passionate about putting his clients first, always, and helping them take advantage of opportunities and overcome the challenges many families face today. He specializes in working with professional women who are in their prime working years and looking ahead to retirement, as well as gay male couples who want to know there’s someone in their corner advocating for them financially as they work toward their goals.
When Tyson isn’t working or trying to grow and be better each day, you can find him training for the triathlons he completes every year, paddleboarding with his daughter, or giving back to the community by staying involved with the local school board and raising money for the Seattle Children’s Hospital. To learn more about Tyson, connect with him on LinkedIn.
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(1) https://www.google.com/finance/quote/.DJI:INDEXDJX?hl=en&window=6M
https://www.google.com/finance/quote/.INX:INDEXSP?hl=en&window=6M
https://www.google.com/finance/quote/.IXIC:INDEXNASDAQ?hl=en&window=6M
(5) https://www.washingtonexaminer.com/policy/economy/inflation-jumps-to-9-1-highest-in-four-decades
(7) https://www.bls.gov/news.release/empsit.nr0.htm
(8) https://finance.yahoo.com/news/june-jobs-report-july-8-2022-211628954.html
