The start of the pandemic was a highly unpredictable time for investors, with so many businesses either going into lockdown precautions or being so heavily impacted that they went bankrupt. This sent a lot of normally stable investments into a flux that nobody was used to. However, two years out from the pandemic, analysts have learned enough to predict some of the patterns we are seeing and may continue to see.

While there is no telling for certain what 2022 may bring, experts can now make an educated guess as to what we will see with investments for the new year. Traders Magazine discussed the topic in detail, but here is a simple breakdown of what you need to know.

A Year Defined by Stimulus

Where the world was at the start of 2021 is startlingly different from what we see now as the year closes. With the vaccines only first beginning to roll out, it made sense to provide stimulus checks to the country for the many who could not go about their regular life. The trillions spent on the stimulus absolutely reinvigorated the economy and has 2022 poised for a strong start.

The Impact of Stimulus Checks on Spending

To keep the economy from grinding to a halt, people need to be buying. The several stimulus checks many Americans received achieved this, restoring demand for goods. However, that demand is now so big that there are no longer enough workers to facilitate it. This has led to higher wages being offered to try and bring in the needed labor.

The Impact of Stimulus Checks on Stocks

Retail trading has remained on a pretty consistent rise despite the pandemic, and it is believed the stimulus helped keep that running smoothly. In fact, things are so strong right now that it is being projected that the end of 2021 is going to set records for stock and options volumes.

Companies Spending More Causing Inflation Increases

The widely talked about labor shortage right now has caused many companies to have to raise their wages to draw in new workers. This has caused companies to be spending more than normal, something that is bad for stocks. Companies are combatting this by raising prices and passing that cost onto the consumer.

Rising Interest Rates

One challenge that is quickly taking shape is linked to the economy being overactive and people actually spending too much compared to the number of workers there are. That puts the government in the position of needing to try and slow things down, and one way they are doing this is by raising interest rates to try and incentivize people to save right now rather than spend.

Inflation Could Taper Off in 2022

The ideal scenario is that the economy will slow down with minimal government regulation needed. With no new stimulus checks for nearly a year now, and the holiday season almost over, spending should begin to slow. This should mean people will begin to save again as we enter 2022, hopefully curtailing inflation.

The 2021 Market Was Not as Volatile as Expected

It is a fact that the volatility for options markets is often overestimated, and that was true for 2021 as well. However, what makes the year unique is 2021 had the highest volatility estimates since the year 2000. Thankfully, the reality was not that bad, which is important to remember for 2022 as well.

Biggest Concern for 2022

The country’s health mandates have helped bring us much closer to normalcy, but the Omicron variant of Covid is looking quite contagious and the severity of it is still unclear. Depending on how this variant affects us, and how the government responds, it could cause another mercurial swing in the economy.

There is no doubt that the country is far better prepared entering 2022 than it was in 2021. So overall the expectation is for a less unpredictable year for investors, which everyone would be grateful for.

If you would like to know more about what awaits investments in the coming year, read the article from Traders Magazine here.

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