Market Commentary. May 2022
Interest rates hikes should help curb inflation, but how does that impact the economy?
- As a result of these projected interest rate hikes, some fear a recession starting as early as this year. And these fears have put pressure on the stock market. The S&P 500 closed on Friday (4/22/2022) down more than 10% from the all-time high set back in early January. But we think that for the time being these fears are overblown. Monetary policy is still very loose and would still be loose even if the Fed raised rates to 2.0% or 3.0% immediately – Brian Wesbury, Chief Economist, First Trust
- As of February 2022, consumer spending on services was $500 billion below trend (annualized), while spending on goods was around $300 billion above trend. What’s more, wages in leisure and hospitality outpace all other major industry segments—pointing to ongoing normalization in consumer demand for services. – New York Life Investments / Mainstay
- Risks to U.S. growth specifically from oil prices have moderated in recent weeks, and we still expect full-year GDP growth of around 3.5%. Vanguard expects the U.S. unemployment rate to fall to its 3.5% pre-pandemic level in the second quarter and even further by year-end. – Vanguard
As always, we continue to believe that one’s circumstances and risk profile should determine the appropriate mix of investments, and not media headlines. Please contact us if you ever have any questions or concerns about your accounts or any news you hear.
Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, asset class, or investment strategy (including the investments and/or investment strategies recommended by the adviser), will be profitable or equal to past performance levels. Information in this commentary is gleaned from third party sources, and while believed to be reliable, is not independently verified.