Page 16 - BusinessWest January 10, 2022

OUTLOOK 2022/THE ECONOMY >>
Optimism Abounds, but Many Factors Make It Difficult to Project
Bob Nakosteen started his discussion con- cerning the regional and national econ- omy with a quick rejoinder that doubled
as something to top everyone’s wish list. “Well, if we put aside COVID...” he started
while talking about the year ahead and, more specifically, about inflation and optimism that the Fed’s anticipated actions to raise interest rates will stem the rising tide of the past few quarters and bring it more under control in the months to come.
Overall (COVID notwithstanding), Nakosteen, a semi-retired professor of Economics at the Isen- berg School of Management at UMass Amherst, said most factors involving the economy are posi- tive — everything from consumer confidence to jobless rates; from a still-white-hot housing mar- ket to persistent pent-up demand for goods and services, especially the former.
Of course, you can’t take COVID out of the equation, as much as we all might like to, and that’s why predicting just what will happen
in 2022 with regard to the economy and the many forces that drive it is still somewhat of a crapshoot.
Still, there is general optimism when it comes to the big picture and matters such as inflation — even though the Fed and others have dropped the word ‘transitory’ when talking about the issue — confidence, supply chain, the stock market, and
perhaps even the workforce crisis, said Nakosteen and others we spoke with.
Indeed, earlier this month, in a note to clients, Marko Kalanovic, JPMorgan’s chief global strate- gist, wrote, “our view is that 2022 will be a year
of a full global recovery, and end of the global pandemic, and return to
“It takes time for supply to meet that surge in demand, and as oil suppliers rebound, we expect to see that price come down, and we’re already seeing some moderation,” he said, adding that, if the impact of Omicron on the global economy is substantial — and already there are signs of
“The Fed wants to make sure it doesn’t jam on the brakes and raise interest rates so fast that they cause the recession they’re trying to avoid. It’s not good to get a recession named after you.
slowdown and even shutdown in some countries — then demand for energy (and, therefore, the prices for same) will come down.
“Regardless, we expect to see inflation mod- erate,” he said. “It will still be a little uncomfort- able compared to what we’re used to — we had gotten used to prices going up 2% or 1% a year, and that was part of
normal conditions we had prior to the COVID-19 outbreak.”
All that might still happen in the next 12 months, but the events of the past few weeks show that recovery may be slower, and perhaps not as complete as JPMorgan projects.
KARL PETRICK
”
Karl Petrick, a professor
of Economics at Western
New England University, told BusinessWest that inflation should ease up in 2022 and retreat from highs of nearly 7% (year over year) in November to below 5% and perhaps to 4% or even 3% in the months ahead.
He said soaring gas prices, triggered by the laws of supply and demand as the economy start- ed to roar back to life roughly a year ago, have been a big factor in soaring inflation, and they have already started to fall.
the shock we felt as prices really started
The Economy
Continued on page 18
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ECONOMIC OUTLOOK 2022
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