Forecast 2022 By Phillip M. Perry
Clearing Skies; B
usinesses should benefit from a favorable operating environment in 2022 as the economy continues to grow at a healthy clip. Although sales of goods and services are expected to decelerate from the previous year’s torrid pace, bottom line earnings should remain high. Aggressive housing activity, robust capital investment and high employment levels should more than make up for the costs of crippled supply chains and pandemic-related labor shortages. Clearing skies with a chance of showers. The economic forecast for 2022 promises a largely favorable operating environment for businesses of all sizes as the nation benefits from steady growth in goods and services. Tail winds include a decline in unemployment numbers, rising wages, a booming housing sector, fat corporate profits, aggressive capital investment and generally easy capital sourcing. “We are in the midst of an early economic recovery after the body blow of COVID-19,” says Bernard Yaros Jr., assistant director and economist at Moody’s Analytics. “Though growth will decelerate in 2022 due to fading effects from businesses reopening and past fiscal stimulus, the economy will remain robust.” The numbers tell the tale. Moody’s Analytics expects real gross domestic product (GDP) to grow at a healthy 4.3 percent in 2022. While that is a bit less aggressive than the 5.8 percent of the past 12 months, it remains decidedly sunnier than the 3.4 percent pandemic-fueled decline of 2020. (GDP, the total of the nation’s goods and services, is the most commonly accepted measure of economic growth. “Real” GDP adjusts for inflation.) Profits Grow
The economic forecast for 2022 promises a largely favorable operating environment for businesses of all sizes as the nation benefits from steady growth in goods and services.
40 | SPRINGS | Winter 2022
Businesses tend to benefit from a healthy economy, and Moody’s Analytics expects corporate profits to increase by some 4 percent in 2022. While that figure might seem unremarkable in isolation, it represents a hefty advance over the difficult comparisons of 2021, when profits spiked 36 percent. Clearly, business owners are glad to bid adieu to the pandemic-battered 2020, when their profits declined 3 percent. Headwinds, of course, are inevitable. And 2022 will have its own troubling mix: The peekaboo pandemic. Labor shortages. Crippled supply chains. China tariffs. Nascent inflation. An unsettled consumer. Yet economists do not expect negatives to prevail. “While the Delta variant is continuing to do some damage, we expect this wave of the pandemic to soon subside and for any future waves to be successively less disruptive,” says Yaros. “Labor and goods shortages will ease as the domestic and global economies increasingly learn how to live in a new pandemic normal.” Furthermore, heftier earnings should help companies weather the coming year’s array of challenges. “Corporate profit margins have been running somewhat above their five-year average of 11.1 percent,” notes Yaros. “That should provide
