By Brian Bloxom, ChFEBCSM
We thought things would have calmed down by now, but the volatility of the 2020s just won’t quit. In fact, it seems as if it’s the new norm. From a global pandemic and historic inflation to an unparalleled housing market and a war in Ukraine, it’s hard to believe we’re only two years into this decade. The economic uncertainty of the last few months has many anxious to know where we’re headed.
Although there are still many unknowns, let’s take the time to reflect and review what’s happened so far in 2022—and what you can expect going forward.
Stock Market Performance
It’s no secret that the stock market has seen increased volatility in the last couple of months—partly due to geopolitical events and partly due to the continued effects of historically high levels of inflation (8.6% for the 12 months ended May 2022). (1)
With the S&P 500 now officially in a bear market, defined as a 20% decline from a recent peak, (2) experts and some of the country’s top CEOs like Elon Musk and JPMorgan Chase CEO Jamie Dimon are warning that a recession is coming. (3)
This year has seen concerns regarding the global economy reach new highs as many countries struggle in different ways:
- The ongoing COVID-19 surge in China has prompted fresh rounds of lockdowns and stifled economic growth. (4)
- The ongoing war in Ukraine and subsequent sanctions against Russia have intensified supply-chain disruptions and increased prices in the energy, food, and commodity industries. (5)
- High inflation in the U.S. is reducing demand for everyday goods and could send the economy into a recession. (6)
There’s no way to know exactly how all these events will unfold, but our best advice is to keep calm throughout the storm. Stock market volatility, and even recessions, are normal parts of the economic cycle, and sticking with a tried-and-true investment strategy is the best way to navigate uncertain times.
Employment Levels
Employment levels have steadily been returning to pre-pandemic numbers, with the June 2022 unemployment rate remaining at 3.6%, unchanged from April and May. (7) This number, about 6 million people, is similar to the February 2020 pre-pandemic rate of 3.5%, or 5.7 million people. (8)
The payroll employment sector also saw an increase of 372,000 jobs in June, which was over 100,000 jobs higher than expected estimates. (9) Education and health services were the leading industries for job creation, followed by professional and business services, then leisure and hospitality. (10) The continued growth in the payroll employment sector defies what many experts would expect from an economy headed for recession. (11)
Interest Rates and the Federal Reserve
In response to surging inflation, the Federal Reserve yet again raised interest rates on June 15th by 0.75%, the largest hike in a single meeting since 1994. (12) As alarming as this already is, further raises are expected, up to approximately 3.4% by year’s end. This suggests another 1.75% in total rate hikes, spread across the remaining four scheduled policy-setting meetings this year, a much steeper path of rate hikes than was predicted in March.
There is much debate over how much rates should rise in order to effectively combat inflation. Too much of a rise could halt economic recovery, whereas too little could keep inflation rampant and send the economy into a recession. However, a Fed statement reiterated its resolve to ongoing increases, with Fed Governor Christopher Waller stating he is “definitely in support of doing another 75 basis point hike in July [and] probably 50 in September.” (13)
What Does This Mean for You?
Not knowing what lies ahead can be unsettling—or even downright scary. But don’t let that prevent you from taking the steps to protect yourself and pursue financial freedom.
We at Sentinel Wealth Partners can come alongside you as we navigate your financial challenges and opportunities with confidence, watching over your portfolio and making necessary adjustments if and when markets dictate. We offer experienced and objective advice, while putting our clients’ best interests first at all times.
If you don’t have a financial partner to help you weather these uncertain times (and whatever lies ahead), reach out to us today by calling our office at 703-832-0164, sending an email to brian@sentinelwealthpartners.com, or using our online calendar.
About Brian
Brian Bloxom is an Independent Financial Advisor, Chartered Federal Employee Benefits ConsultantSM (ChFEBCSM) and Chartered Retirement Planning Counselor℠, CRPC® professional with 25 years of experience in financial advising. He founded Sentinel Wealth Partners to serve retirees, individuals approaching retirement, and individuals managing complex retirement plans such as company plans or federal benefits plans. His expertise and dedication to helping his clients achieve their goals make him a trusted resource that will help you feel confident in your customized retirement plan. Brian’s mission is to be available to his clients—all the time. He’s here to solve your problems, relieve your anxiety, and give you optimism for retirement. Because ultimately, your retirement should be about well-deserved enjoyment, and not about stress or anxiety. When he’s not working, you can find Brian spending time with his wife, Jessica, and their two sons, Spencer and Preston. He enjoys coaching soccer, serving in his community, golfing, and relaxing at his vacation home at Lake Anna, VA. To learn more about Brian, connect with him on LinkedIn.
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(1) https://www.usinflationcalculator.com/inflation/current-inflation-rates/
(4) https://www.nbcnews.com/news/world/china-shanghai-covid-lockdown-beijing-shuts-districts-rcna32696
(7) https://www.cnbc.com/2022/07/08/jobs-report-june-2022-.html
(8) https://www.bls.gov/news.release/empsit.nr0.htm
(9) https://www.cnbc.com/2022/07/08/jobs-report-june-2022-.html
(10) https://www.cnbc.com/2022/07/08/jobs-report-june-2022-.html
(11) https://www.cnbc.com/2022/07/08/jobs-report-june-2022-.html
(12) https://finance.yahoo.com/news/fed-fomc-monetary-policy-decision-june-2022-120337242.html