For the economy2022 was a year of recoil. And not in a good way.
At times, it felt like the 1970s or early 1980s.Inflation runs rampant. The United States and its European allies engaged in a not-so-cold war with Russia. A bleak outlook that leaves people feeling sour and anxious.
It wasn’t supposed to turn out like this.
When the policy makers of the Federal Reserve they made their forecasts for 2022 a year ago, they seemed almost gleeful. After two years of tumult caused by the pandemic, they expected the US economy to return to something close to normal.
They expected consumer inflation to reach 2.6% by the end of 2022 compared to 12 months earlier. That would have been just a few points above its 2% annual target, but nothing ominous, and a clear recovery from high inflation in early 2021.
It turns out that Fed officials they underestimated how wage increases, federal aid, supply shortages, and consumers’ pent-up desire to spend would conspire to accelerate inflation and keep it high.
But they mainly did not foresee that President Vladimir Putin would send tens of thousands of Russian troops to invade Ukraine in February of this year, a shocking act of aggression that upended global trade in energy and agricultural products and sent prices up for oil, natural gas and cereals. soaring.