2022 Outlook: Warning signs from 2021 that you should pay attention to

2022 Economic Forecast by Legacy Precious Metals

2021 is coming to a close and the number one question we’re getting from most of our clients is what’s going to happen in 2022. In order to forecast what 2022 will look like from an economic standpoint, it’s important to look at the data we’ve obtained this past year. 

We all knew that spending was going to rise significantly under the Biden administration. Even with Senator Manchin torpedoing the Build Back Better bill, 2021 saw unprecedented spending with no clear way to pay for it. While this is par for the course for the reliably irresponsible democrats, let’s take a closer look at some key factors to pay attention to.

Oil could hit $100 a barrel in 2022

The Biden administration has cancelled key pipelines and has increased drilling regulations creating a toxic and untenable environment for oil companies. This has made us more reliant on the rest of the world for oil which is in sharp contrast to President Trump who made the United States more energy independent than ever before. This has also led to a spike in oil prices which every American has felt at the pump. 

In addition to the financial burden rising gas prices has on everyday Americans, it’s also a disaster for our economy. Increased oil means increased shipping costs. When shipping costs increase, those price hikes are passed through to the consumer, thus increasing the cost of goods. Beyond the economic impact of rising oil prices, we also have lost the energy independence we had. This makes us more dependent on foreign governments, the middle east, and makes the world more volatile. 

With inflation already rising at a record pace, rising oil prices adds fuel to the fire.

Inflation fears have become a reality 

Inflation rose steadily this past year and there is no end in sight. Economists have called the spike in inflation the perfect storm. The economy has been completely mismanaged and instead of changing strategies the White House is stubbornly staying the course.

After a year of supply chain issues, the democrats simply have no solutions as Americans see the prices of essential items continue to rise. Rising oil prices will further compound the problem as soaring inflation continues to devalue the dollar.

Inflation was up 6.8% in November, which means your dollar is now worth just over 93 cents. This is equivalent to an additional tax on all Americans. Depending on where you live this is a doubling of your sales tax for purchases and a tax on your savings. If inflation continues to increase, Americans are going to see their savings account deplete month over month in 2023.

Housing market volatility

According to data from the National Association of Realtors, the median price for an existing home rose to just under $354,000 as of November (the most recent month for which data is available), an annual increase of around 14 percent. Economists predict that the prospect of higher interest rates could act as a brake on future home price gains in 2022, since paying more to service a mortgage leaves homebuyers with less money to spend each month on payments. 

The supply of homes will remain an issue, economists say. A June report found that the U.S. housing market has a demand-supply gap of 6.8 million units, and higher prices for materials and labor will make closing that gap even more challenging.

The middle-class has long viewed real estate as a fool proof investment, but if housing prices stall as predicted, that combined with a demand-supply gap could spell disaster for the housing market.

So what should we expect in 2022? 

We don’t want to be alarmist but it’s hard to be optimistic about the economic outlook for 2022. We have rising inflation, labor shortages, more government shutdowns because of Covid, rising oil prices, and an administration that has shown they are incapable of dealing with these very real issues facing the American people.

You can see that all the financial markets are tied to one another. They’re like a house of cards, when one falls it impacts the rest of them. If the housing market crashes, the banking sector is next to follow. If oil prices go up, the commodities markets are impacted. Now more than ever is the time to diversify your portfolio to protect your wealth and your investments. 

Moving money from the stock market to the real estate market is, or from your IRA to a different mutual fund is not a true hedge. To truly hedge against financial instability you need to invest in an asset that is separated from the traditional markets. Gold and Silver offer you true protection from financial calamity. Gold has historically been inversely proportional to the dollar. As the dollar decreases in value, gold becomes more valuable. As inflation rises, gold offers you a hedge against inflation. 

While the situation seems dire you don’t need to be fearful of the future. You can eliminate that fear by seeking protection in what has always worked. As you watch the damaging effects of this administration’s policies on the financial well-being of so many Americans, you can have peace of mind that your future is secure because you took proactive steps to protect yourself.

Our team at Legacy Precious Metals is trained to give you expert advice based on your unique financial situation. Based on the size of your portfolio, and the types of investments you hold, we can make recommendations that are tailored to your families specific needs. 

Whether you are considering making an investment in precious metals soon or not, it’s important for all Americans to be educated on the options available to them so that they can make the most informed decision possible. 

Call us today at (866) 473-6204 or to speak to one of our no-hassle IRA experts. It’s a complicated time and you need a team behind you who can give you honest, patient advice.

Call us at (866) 473-6204 to speak to an IRA expert or email us at info@legacypminvestments.com.