2022 Mid-Year Investment Update

2022 Mid-Year Investment Update

Author: Kurt Spieler, Chief Investment Officer

The first half of 2022 saw the largest U.S. stock market decline in over 50 years.1 In our 2022 Mid-Year Investment Update, the FNBO Investment Management team shares its thoughts on this historic decline, including the role of inflation and the possibility of a recession.

We see four primary factors determining whether inflation will moderate as this year progresses.

1. Liquidity: Money Supply and Federal Reserve Policy. We believe inflation will eventually moderate in response to lower money supply and changes in the Fed’s monetary policy.
2. U.S. Fiscal Policy. The decline in government spending may negatively impact economic growth, but it could help in the fight against inflation.
3. Consumer Demand: Employment, Income and Savings. A tight labor market led to an acceleration in wages, but earnings are still not keeping pace with inflation, leading consumers to dip into savings and increase debt to finance higher spending.
4. Supply of Goods. With supply chain problems and labor shortages affecting companies, investments are being made to address these issues.

Read the full Mid-Year Investment Update for a detailed analysis on the likelihood of a recession and to learn how our team is adjusting its outlook and strategy in response.