The fun thing about making predictions and resolutions is that usually shortly after they are made, they are often forgotten. However, since I often preach about accountability in this space, I hope you will keep this column to see how accurate my predictions are and keep my next column to see how well we stick to my resolutions.
While I have not done it every year, I often like to use my first column of the year for predictions. My next column will be focused on 2022 resolutions.
2022 National Economic Conditions
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Inflation: Inflation was a significant problem in 2021, with prices increasing at a rate of almost 7% after many years of very low inflation rates, averaging about 2.5% annually. My prediction is that the inflation rate has peaked, but that higher-than-normal inflation rates will persist for at least the first half of 2022.
With apologies to the economists in Augusta University’s Hull College of Business, I will take a crack at predicting what will happen in the U.S. economy in 2022:
Interest rates: I predict that persistent increased inflation will likely cause the Federal Reserve to accelerate its tapering of quantitative easing and subsequently the increase of interest rates. “Quantitative easing” describes when the Fed purchases large assets, such as bonds, to reduce interest rates, encourage lending and increasing the nation’s money supply. “Tapering” means the Fed is buying fewer large assets. I predict that interest rates will increase by at least 1% by the end of 2022.
More:Uncertainties cloud Augusta’s 2022 economic outlook
Unemployment rate: As of the end of November, our national unemployment rate was 4.2%. Despite Goldman Sachs predicting an unemployment rate of 3% by the end of 2022, I predict that it will remain between 4% and 4.5% for all of 2022. While I expect employment to increase during the year, I expect most of that increase to come from those returning to the workforce, therefore keeping the unemployment rate approximately the same. Gross domestic product: I have seen GDP growth projections for 2022 ranging from 2.5% to 5.5%. My prediction is that we end up on the high side of that interval, approaching 5%. While I think growth will slow in Q1 and possibly linger into Q2 (see the next two subjects below), I predict that our economy will roar in the second half of 2022.
Supply chain issues: While I predict the current supply chain issues will persist in Q1 (helping cause persisting inflation) because of lingering labor issues and holiday returns, I predict that by Q2, most of our major supply chain issues will be behind us as companies and their suppliers better address demand and supply mismatches. COVID-19 impact: While the omicron variant has delivered a negative impact on our economy at the end of 2021, this variant appears to be more contagious but less severe, potentially accelerating the transition of COVID from a pandemic to an endemic, a persistent but manageable threat on par with a seasonal flu. I predict (hopefully!) that this is the case, and the impact of COVID on our economy will dampen significantly by late Q2 or Q3.
Predictions – 2022 Augusta Business As you can see so far, I am fairly bullish on the U.S. economy for 2022. However, I am even more bullish on Augusta business for 2022. If the impact of COVID-19 decreases as I expect, I predict the effect on the Augusta economy will be even more positive.
Cyber boom realized: While we have definitely seen a growth in our local economy because of cyber, we are still awaiting the cyber boom. With more than $1.5 billion in construction ongoing at Fort Gordon, we can see the boom coming. Also, with the anticipated COVID endemic, we will more fully see the growth of the cyber industry in and around Augusta. Savannah River Site growth: The economy of the area will grow significantly as the mission of SRS expands. As SRS prepares to become one of two primary locations for plutonium processing facilities in the United States, expect significant job growth at SRS from now into the mid-2030s.
More:University Hospital weighs very different outlooks for 2022; it depends on COVID-19 Health care thrives: As COVID transitions from pandemic to endemic as I predict, health-care providers such as University Health System and Augusta University Health should thrive as normal operations return. The pandemic has caused a backload of necessary and elective surgeries and other medical procedures, which will improve revenues. In addition, as University’s partnership with Piedmont progresses, Piedmont’s infusion of investment will further enhance University’s capabilities.