The 2020 COVID recession was sharp, but short at only two months; while the rebound in activity has also been sharp, but uneven across economic metrics. Overall gross domestic product (GDP) moved from the recovery phase to the expansion phase as of the second quarter of 2021. As highlighted in the visual below, the question heading into 2022 is where we go from here—especially due to the stark reminder on this year’s “Bleak Friday” that the pandemic is nowhere near behind us.
The blaring stories about high inflation are inescapable after last week’s shockingly strong inflation report. We wrote about surging prices spreading to more and more everyday products, which undercuts the “transitory” narrative
Signs are growing that inflation may be more tenacious than originally expected. We don’t believe a return to 1970s-style inflation is likely, but there is a worrisome scenario in which persistently sharp increases in prices could be a factor to reckon with—and if history is any guide, they could have an impact on sector performance.
