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10 Key Economic Trends for 2022-2024

by Josh Howarth
September 6, 2022

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Trends in the global economy affect everything.

In fact, it could be argued that almost every other trend is dependent on economic conditions.

In a downturn, consumer confidence wanes, retailers struggle, and businesses are forced to deal with uncertainty. And in times of growth, critical infrastructure and innovation can be built out.

With that, here's our list of the top 10 trends impacting the economy right now.

1. Risk of Stagflation Looms

According to The World Bank and other economists, the United States and the global economy is at risk of stagflation in the near future.

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Search volume for “stagflation” picked up in 2022, showing an increase of 514% of the past five years.

Stagflation is particularly difficult to correct because the usual correction methods used for one issue can make the other issues worse.

There are quite a few data points signaling that stagflation might be near.

In the first quarter of 2022, the U.S. GDP decreased 1.6% year-on-year. In the second quarter, it contracted 0.9%.

The Conference Board predicts this economic weakness will lead to a recession before the end of 2022.

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The Conference Board predicts that a “broad downturn” will hit the U.S. economy soon.

Their projections show that Real GDP growth will hit 1.3% in 2022 and only 0.2% in 2023.

As for consumer prices, the Federal Reserve predicts inflation to settle at 4.1% in 2022, 2.6% in 2023, and 2.3% in 2024.

Keep in mind that the Fed’s target inflation rate is 2%.

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“Inflation” has been a popular topic since mid-2021. Search volume is up nearly 300% since 2018.

The last factor of stagflation, unemployment, may be the economy’s saving grace.

In July 2022, the unemployment rate was 3.5%.

This is a rate that’s similar to pre-pandemic levels.

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Unemployment rates have been dropping nearly every month of the past year.

Even so, according to a survey by the Securities Industry and Financial Markets Association, 80% of economists say stagflation is a long-term risk to the economy.

A survey from Bank of America came up with a similar opinion among economists: 83% say they’re expecting little growth and high inflation to hamper the economy throughout 2022.

The Bank of America survey results were explained this way: “Inflation will remain high relative to history. By far and away the most popular description of what the economic backdrop will be in the next 12 months is 'stagflation'."

2. Spending On Durable Goods Remains High in Industry, Drops Among Consumers

Data regarding the purchasing of durable goods, expensive items that will last at least three years, can give us a peek into the health of the economy.

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Search volume for “durable good” shows 85% growth since 2018.

The basic premise is this: when people feel confident about the economy, they are more likely to purchase durable goods. If they’re leery of the economy, they’ll put off these big purchases.

The durable goods market in the United States is valued at about $1 trillion.

The U.S. Census Bureau reported that orders of durable goods throughout the past year have been up and down.

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Data from the U.S. Census Bureau shows month-to-month changes in durable good orders.

Durable good orders were up 2.2% month-over-month in June 2022, but remained unchanged in July 2022.

This includes durable good purchases of both businesses and consumers.

Economists say that the lack of a sustained decline in durable goods purchasing shows businesses are still investing and the economy is holding off on a recession.

This is despite continued supply chain issues and rising costs of materials, meaning that businesses are seeing adequate demand from consumers despite inflationary pressure.

Future trends in consumer spending show that purchasing of durable goods will be coming down after hitting highs during the pandemic.

In 2020 and 2021, many people shifted their spending from services to goods. This is because they were unable to travel or go out to eat at restaurants, for example.

At the height of the pandemic, Americans’ spending on durable goods was more than 30% higher than pre-pandemic levels.

Predictions for consumer spending on durable goods show growth in 2022, but nothing like what happened during the pandemic.

Furniture revenue is expected to grow 3.5% and electronics revenue is expected to grow 2.8%.

However, the Surveys of Consumers from the University of Michigan shows that buying conditions for large household durable goods is at an all-time low in 2022.

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According to survey data from the University of Michigan, buying conditions for household durables have worsened significantly since 2020.

This may be partially due to rising interest rates. Consumers are less likely to finance expensive purchases when the cost of borrowing is high.

In addition, the prices of durable goods have increased 14% over the past year while the cost of services have only increased 5.4%.

3. Retailers Drown in Inventory as They Brace for Reduced Consumer Spending

Industry experts warn that slow economic growth and rising prices may lead consumers to tighten their budgets, resulting in a decline in retail sales.

NPR gave a summary of mid-2022 retail results, reporting that consumers are making fewer purchases and cutting back on non-essentials.

A survey from McKinsey echoes that data.

They reported that many American consumers are starting to adopt “value-conscious behaviors” as they’re shopping.

In the February 2022 survey, consumer sentiment showed a significant drop. Only 38% of consumers said they felt optimistic about spending and the economy. That’s down from 44% in October 2021.

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Search volume for “consumer sentiment” has been climbing since 2021.

It may be too early to see exactly where this trend is headed in the coming months.

Retail sales were down 0.1% in May, but up 1% in June and flat in July.

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Data shows consumers are maintaining the ability to spend, but retail experts fear that may not last.

One of retailers’ biggest concerns is the inventory swing.

Many bought a glut of inventory to be prepared for consumer demand that had peaked during the pandemic, but supply chain disruptions delayed shipments and that demand didn’t materialize at the right time.

In May 2022, Walmart lowered its revenue and earnings-per-share projections for 2022.

In addition, the retailer reported a 33% increase in inventory year-over-year.

That resulted in a surplus of $61 billion worth of inventory at the end of the first quarter 2022.

Target is facing a similar challenge.

They’ve also cut profit projections and dealt with excess inventory.

Their inventory was up a whopping 43% year-over-year as of May 2022.

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Target has seen a decline in operating profit margins since early 2021.

Although consumer spending grew at a slow pace in the second quarter of 2022, some economists remain confident about the economy.

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Search volume for “consumer spending” has increased in 2022.

A strong labor market and adequate levels of savings are making consumers more resilient than usual, they say.

The National Retail Federation agrees.

Their forecasts show that 2022 retail sales will total above $4.86 trillion.

That’s more than a 6% growth. For reference, the 10-year pre-pandemic growth rate was just 3.7%.

4. Real Estate Sales Expected to Drop as Prices Remain High

The real estate market is expected to be plagued by fewer sales and higher prices through 2023. That’s according to the National Association of Realtors.

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Search volume for “real estate market” shows growing interest.

They expect to see a 13% drop in home sales in 2022 and an 11% increase in price.

Their predictions for 2023 show no change in the number of homes sold but a 2% increase in price.

In July 2022, sales of existing homes fell nearly 6% compared to the month before. That was the sixth consecutive month that sales decreased.

Even more startling, home sales in July were more than 20% lower than one year ago.

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Fannie Mae predicts 4.57 million existing homes will sell in 2022 and 4.55 million will sell in 2023.

We are seeing trends shift regarding the price of homes, too.

From June to July 2022, housing prices nation-wide dropped slightly, 0.77%.

That was the largest monthly decline in home prices since January 2011.

We’re also seeing the major metro areas seeing a more substantial drop in prices. Home prices in San Francisco dropped by 2.8% in July and in Austin prices dropped 2.7%.

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July data shows a drop in home values in several metro areas that have become famous for lack of affordable housing in recent years.

However, home values are still up 16% over 2021 and experts say a major drop in home prices isn’t going to happen.

The battle between supply and demand is expected to continue. When inventory catches up to demand, real estate industry experts say that home prices will stabilize, not decrease.

A panel of housing market experts say that won’t even happen until 2024.

The media sales price of a home in the United States currently sits at $440,300.

Of course, mortgage rates play a big role in the affordability of homes.

At the beginning of 2022, the 30-year fixed-rate mortgage rate was 3.22%. At the end of July, it was 5.30%.

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Search volume for “mortgage rates” peaked in 2020, but is climbing again.

Black Knight, a financial services company, reports that home affordability is at its worst since the mid-1980s.

As of June 2022, the company’s data shows that it takes more than 36% of the median household income in the U.S. to pay the mortgage on an average-priced home.

5. Energy Crisis In Europe Drives Recession Fears

As the conflict in Ukraine continues, economists are warning that ongoing sanctions imposed on Russian energy commodities in Europe could trigger a recession there and make an impact around the globe.

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Search volume for “Europe recession” has spiked in recent months.

In 2020, Russia accounted for more than 40% of the EU’s natural gas imports, 37% of their oil imports, and 19% of their coal imports.

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In 2020, the EU imported a considerable amount of their energy sources from Russia.

Europe also imports 50-60 million tons of diesel per year, about half of it coming from Russia.

The war has forced many EU countries to reevaluate their energy options and ease their dependence on Russia.

The EU has set a goal of banning all oil imports from Russia that are brought in by sea by the end of 2022 and halting all coal imports, as well.

They’ve also said they’ll reduce natural gas imports by ⅔ by 2023.

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Search volume for “energy crisis” is up more than 400% in the past five years.

How will energy flow in the wake of these sanctions and others that may possibly be revealed in the coming months?

Europe is turning to other countries to replace the energy exports they were getting from Russia.

Germany, the second-largest importer of Russian energy commodities, formed an energy partnership with Qatar in March 2022.

The countries are also filling gas storage tanks in order to make it through the winter.

Still, energy prices in Europe are soaring.

The average energy bills in the U.K. will be climbing 80% in the next 14 months. Another increase is expected to be announced in January 2023.

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Energy costs in the EU are skyrocketing, leading many to believe that a recession is inevitable.

Despite the relief efforts offered to families, price hikes have economists fearing a drawn out recession.

Analysts say this energy crisis, coupled with elevated inflation, means that Europe is looking at a recession during the winter of 2022-23.

A recession in Europe would mostly likely be felt in the U.S.

One reason is exports. The EU accounts for nearly 15% of exports from the U.S. If Europe cuts down on imports, U.S. businesses suffer.

Another reason is that the euro is falling. This makes U.S. imports more expensive for Europeans, decreasing demand for American products even more.

6. Persistent COVID Lockdowns in China Impact the World

China’s COVID-zero policy and persistent lockdowns are increasing economic pressure around the world.

The country plays an incredibly important role in the U.S. supply chain.

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Search volume for “supply chain management” has grown 39% since 2018.

China accounts for nearly 30% of global manufacturing output.

It’s also home to six of the 10 busiest ports in the world.

In May 2022, there were 344 ships waiting to be loaded at the Port of Shanghai. That was a 34% increase over April.

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Search volume for “Port of Shanghai” saw a sharp increase due to the backup in mid-2022.

China’s export growth in April 2022 dropped to 3.7% year-over-year. In comparison, the country had increased exports 15.7% in March 2022.

These disturbances are affecting American companies.

In May 2022, Adidas revised yearly growth predictions due to the “severe impact” of COVID lockdowns in China.

The corporation’s net income in Q1 of 2022 fell to roughly $310 million, nearly $200 million shy of the previous year.

Even the manufacturing of Apple’s iPhone has been delayed by China’s COVID policies.

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Apple is one of many American corporations experiencing supply chain woes due to China’s COVID policies.

In May 2022, assembly plants in Shanghai and Kunshan were forced to close.

The tech giant has also cited COVID disruptions as one reason why they’ll lose out on between $4 and $8 billion of revenue in mid-2022.

Tesla’s first quarterly sales drop in two years happened in July 2022 with company executives blaming Chinese lockdowns as the main reason for the decline.

Deliveries were down 18% in Q2 as compared to Q1.

Although places like Australia and Singapore have dropped their COVID-zero strategies, experts warn that China may not follow suit anytime soon.

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Several cities in China have been locked down for more than 50 days since March.

Economic and health policy advisors from The Center for Strategic and International Studies report that China’s economy will struggle to gain even 1% or 2% growth in 2022 due to the disruptions their COVID strategies have caused in supply chains, manufacturing, and consumer spending.

They also say that China’s President Xi giving up on his COVID-zero strategy would be akin to “admitting failure of his leadership.”

7. Potential Retirees Uncertain About Their Financial Future

A 2021 study found that 30% of workers are not confident in having enough money for retirement.

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Up nearly 50% in the past five years, search volume shows growing interest in “retirement account.”

One-in-three workers from that survey say that the pandemic negatively impacted their ability to save for retirement.

When workers couple pandemic-related challenges with current inflation rates, the prospect of retirement becomes very uncertain for many Americans.

In fact, a BlackRock survey reports that 42% of people say that pandemic hardships have set them back in retirement savings. Nearly one-fourth say they’re not earning enough to save and 17% say the cost of living is too high for them to put any money toward retirement.

When savings data is broken down by generation, Millennials have been the most likely to cut retirement savings out of their budget—18% said they’ve done this.

Just 5% of people born in Gen X (between 1965-1980) have decreased the amount they’re saving, but 11% of Baby Boomers have done the same thing.

Financial advisors say that workers should plan on needing 80% of their annual salary to spend each year in retirement.

For a person who earns $100k annually, this basic formula would mean that they need $80k per year for retirement.

Most Americans aren’t even close to that savings goal.

One survey found that the median amount Americans have in their retirement account is $71,500.

The survey reported that more than 25% of people have less than $50k saved and 16% have no retirement savings at all.

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Only a small percentage of Americans are currently saving enough money to be able to retire comfortably.

The rising cost of healthcare is one reason many Americans will need such a hefty retirement account.

According to data from Fidelity, a couple that retires in 2022 at the age of 65 will need $315k to cover their healthcare expenses in retirement.

Nearly 45% of Americans are concerned they simply won’t have enough money to cover these costs.

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Concerns about future healthcare costs is one of the top challenges retirees are facing in 2022.

These economic concerns may be enough to force many to put off retirement.

According to Gallup, both the average age of expected retirement and the age of actual retirement are going up.

In 1995, the average age at which workers expected to retire was 60. It’s now 66 years old.

In 1991, retirees reported that they were 57 years old when they actually retired. Now, that number is 61.

8. Climate Change Threatens Local, National, and Global Economies

The impact of climate change is accelerating.

When discussing the effect of climate change on economies, researchers caution it’s already having an adverse impact on a local, national, and global scale.

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Search history for “economic impact of climate change” shows growing interest.

NOAA’s data shows that Earth’s temperature has risen .14° F per decade since 1880. However, the rate of warming increased to .32° F per decade in the years since 1981.

2021 was the sixth warmest year on record.

Climate change has been linked to all sorts of extreme weather events: blizzards, heat waves, hurricanes, wildfires, and others.

The impact of climate change reaches far beyond the actual weather events, though. It’s threatening the U.S. economy, too.

Since 1980, the U.S. has experienced 332 weather disasters in which overall costs were $1 billion or more. The total cost of all the events is more than $2.275 trillion.

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NOAA reports nine billion-dollar weather disasters in 2022 so far.

Many times, these weather events prove to be a financial disaster to homeowners as well as insurance companies.

In 2021, the 97 natural disasters resulted in $92 billion in insured losses for homeowners.

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Natural disasters in 2021 resulted in approximately 770 deaths and $169 billion in economic losses.

Insurance industry leaders say home insurance premiums may jump as much as 5.4% per year through 2040 in response to climate change.

For many homeowners, the increases are already happening.

A Policygenius analysis found that 90% of homeowners saw an increase in their rates between May 2021 to May 2022.

The data shows residents of Arkansas, Washington, and Colorado all saw rate hikes of more than 17%.

Climate change also has the potential to severely impact economies across the globe.

A 2022 analysis from S&P Global found that climate change could result in up to 4.5% reduction in global GDP by 2050.

Swiss Re predicts the reduction in total economic value could be 10% by 2050.

In addition, a study found that 63 countries are at risk of having their credit rating cut by 2030 as a result of climate change. By 2100, researchers estimate that 80 countries will have an average downgrade of 2.48 notches.

9. Greenflation Raises the Cost of the Energy Transition

As countries institute climate change mitigation efforts, the global economy is seeing some unintended consequences.

One is termed greenflation—the increase in the price of energy and materials due to the transition to green energy.

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In the past two years, the term “greenflation” has spread and search volume is up 500%.

A few key factors are driving this trend.

There’s volatility in the energy markets due to current dependence on fossil fuels, decreasing investment in fossil fuels, and a disordered transition to green energy, which is not yet widely available enough to meet demand.

Investment in fossil fuels took a hit in 2014 as the price of oil crashed and hasn’t recovered since.

Investors seem to have the right idea because recent research predicts half of the world’s fossil fuel assets will be “worthless” by 2036.

As the world still relies on “brown” energy, it’s getting more and more expensive.

One analyst says that oil prices alone have accounted for 27% of extra inflation since the pandemic began.

On the flip side, investors and corporations are looking to buy into green energy, but not quickly enough.

In 2021, global investors put $755 billion into the energy transition, but the International Energy Agency says that number needs to jump to $4 trillion annually in the next decade in order to achieve climate goals.

Fossil fuels still account for 84% of global energy usage. Renewable energy accounts for only 11.4%.

The other risk of greenflation is the increase in demand and a low supply of critical materials associated with green energy. This includes materials like aluminum, cobalt, lithium, nickel, and others.

In many cases, the cost of “green metals” has tripled.

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Search interest in “green metals is up more than 40% since 2018.

The price of aluminum, which is used to build wind turbines and solar panels, was at $1,704 per metric ton in 2020, but prices skyrocketed in 2021 and 2022.

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Aluminum prices saw a steep increase in 2020 and the months that followed.

Demand for cobalt is soaring, due in large part to its role as a key material in electric vehicle rechargeable batteries.

Cobalt prices jumped to more than $80k per ton in March 2022.

The high cost, along with concerns about the labor practices used to mine cobalt, is leading some manufacturers to look for cheaper green materials.

A heavier reliance on nickel in the traditional battery cathode and a new design for an iron sulfide cathode are both possibilities for the near future.

10. Labor Shortage May Take Years to Resolve

Although the monthly unemployment rate has been declining slightly throughout the first half of 2022 and is now back to pre-pandemic levels, the size of the labor force in the U.S. is approximately 3 million workers smaller than it was pre-pandemic.

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Search volume for “labor shortage” jumped in 2021.

The labor force participation rate (LFPR), a statistic that shows the share of the population ages 16 and above who are working or seeking employment, reached a high of 67.1% in 2000, but now sits at 62.1%.

That’s 1.3 points lower than pre-pandemic levels.

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LFPR has not returned to pre-pandemic levels yet.

Retirement is one factor at play.

More than 1.7 million more workers than expected retired in recent years due to the pandemic.

Plus, 41 million workers are Baby Boomers and they’ll all be 65 or older by 2030.

A survey conducted by the U.S. Chamber of Commerce shows there are a few key barriers to work for younger people.

Their results show nearly 30% of people aren’t returning to work due to concerns about COVID and 28% say illness has kept them from working.

The top two other reasons cited for not working were people needing to stay home to take care of others and people who believe their industry doesn’t have enough jobs available.

One analyst calls the decreasing rates of workforce participation a “slow-burning catastrophe.”

McKinsey warns that rising wages, inflation, and supply chain issues are the short-term challenges the country may see from labor shortages.

However, an ongoing worker shortage could mean that America simply doesn’t have enough workers to drive growth in GDP and it could be a contributing factor if the country slips into a recession.

Labor shortages may take years to resolve, according to a strategist at JP Morgan.

Conclusion

That’s all for the top economic trends to watch in 2022 and beyond.

The pandemic, the threat of a recession, and environmental concerns have definitely changed the global economic outlook. There are a number of trends that have been disrupted, but other trends that have accelerated in the face of uncertainty.

We will continue to watch and see how business and governments react to surging prices and slow GDP growth. Look for consumer resilience and attitudes to possibly shift in response.