By Rick Schwerd
The end of the year is always a good time to take stock of your investments and look ahead. Last year at this time, it was easy to be bullish on the stock market. Vaccine distribution was just starting, the country was continuing to reopen and unprecedented stimulus was being injected into the economy.
As we head into 2022, there is still a lot to be positive about, such as robust company earnings and a very healthy consumer base. However, concerns about the Omicron variant, global supply chain issues, labor shortages and inflation are tempering enthusiasm.
Stock markets had another good year. The Standard and Poor’s (S&P) 500, an index of 500 of the largest companies in the U.S., is up approximately 20 percent year-to-date, as of early December. Small-cap stocks, mid-cap stocks and most international markets have also shown strong gains this year. As expected, short-term interest rates have remained near zero as the Federal Reserve continues its accommodative fiscal policy. Intermediate and long-term rates have risen as the economy has improved, but in a measured way.
As we look forward, there is plenty to be positive about. The U.S. consumer is doing very well, which is vital since consumer spending accounts for nearly 70 percent of our Gross Domestic Product (GDP). The unemployment rate has fallen from 6.7 percent at the start of the year to 4.2 percent in November. Wages and salaries are up approximately 10 percent year-over-year. U.S. consumers have accumulated more than $2 trillion in excess savings and consumer net worth has surged about 30 percent since the start of the pandemic. These factors provide confidence that strong retail sales of goods and services will continue into 2022.