Consider these statistics: In April 2020, the national unemployment rate skyrocketed to 14.8%. In the third quarter of 2021, Utah home prices increased 23.8% year over year. And as of November 2021, the Consumer Price Index saw prices increase by 6.8%, a rate not seen since the early 1980s. 

It’s no secret that the economy has been unpredictable these past two years. The question is this: Will anything go back to (relatively) normal in 2022? Let’s take a look at what economists predict about the growth of the economy, interest rates, cryptocurrency, employment rates and the housing market. There’s no crystal ball, but these evidence-based predictions may give you a little more confidence as you make financial decisions in 2022.

4%: National economy growth

What does 4% really mean? As is the case with any statistic, it’s helpful to look at the context to get a better idea. In 2020, the growth rate of the US economy was 3.4%, and it’s on track to be 6.3% in 2021 as the economy recovers from the pandemic, according to Lasse Sinikallas, director of macroeconomics at RISI. “Still, growth looks set to slow in 2022 to 4%,” he said. In other words, 2022 is looking more like 2020 as far as overall growth goes. 

2-3: The number of times the Fed will raise interest rates

In 2022, we’re looking at higher interest rates amid a hawkish Fed and uncertainty about Omicron. 

“I’m predicting that the Fed will raise interest rates at least twice in 2022, if not three times, and that it’s going to find inflation a lot more difficult to control than they think,” said Matt Frankel, CFP. “I think inflation will run over three percent for the foreseeable future.”

With a continued lack of workers and a shortage of supplies, it seems clear that inflation will continue, at least until supply chain issues resolve.

20%+: How much cryptocurrency markets will fall

When inflation happens, the Feds raise interest rates. When interest rates rise, investors start to hesitate to buy into high-value growth stocks. Frankel predicts that this will affect cryptocurrency.

“If I’m right and growth stocks have a rough year, you’re also going to see a lot of institutions start to pump the brakes on crypto,” he said. “I’m predicting a decline of 20 percent or more. I put a number on it, 20 percent or more in 2022.”

4%: Unemployment rate

You’ve heard of the Great Resignation, which many experts attribute to the extraordinary circumstances caused by the response to the COVID-19 pandemic. But as the virus fades, the mass exodus from the workplace should, too. 

“As the pandemic diminishes, gradually, the job market will move back to normal, and the unemployment rate will be around 4%,” said Dr. Tenpao Lee, professor emeritus of economics at Niagara University,

But it won’t be business as usual. The job market is in favor of employees, which means some changes are coming. We can expect to see higher wages as employers strive to stay competitive and to account for inflation. Benefits will also increase.

“Heading into 2022, we’ll see employers implementing new strategies to recruit workers, as well as amping up employee benefits, compensation and other perks to … keep workers happy and engaged,” said Emily Payne, managing editor at http://BenefitsPRO.com. “Even after the Great Resignation ebbs, these new tactics will likely become the new standard.”

5: Number of overvalued housing markets poised to flatten

Across the county, the hot housing market is expected to cool off a bit. It still won’t be a buyer’s market, but there will be more selection, and prices won’t increase as quickly.

“We will see a rush to buy homes at the start of the year before mortgage rates rise. That early onslaught of demand will deplete the supply of homes for sale,” said Daryl Fairweather, chief economist of Redfin. “In the second half of the year, a much needed increase in new construction will boost sales slightly. In 2022, there will be 1% more sales than in 2021, and by the end of the year, home price growth will slow to 3%.”

What about in Utah specifically? According to Elena Cox, a data journalist for http://realtor.com, the Salt Lake City market is poised to grow faster than any in the country in 2022. However, five of the country’s most overvalued markets will flatten, and two of those are Provo and Ogden. Homes in Ogden are selling at a 55.94% premium, and homes in Provo are selling for a 49.81% premium. Having reached their inflection point, these prices will start to level off.

No one knows for certain what’s going to happen with the economy in 2022. But you can get a little insight by seeing what economists predict will happen with the growth of the economy, interest rates, cryptocurrency, employment rates and the housing market. If you’re looking for more personalized advice, local services like Merrill Financial Associates can help you make the best money management decisions for your situation.