MINT HILL, NC – How does this fairy tale relate to our current economy? Easy…we have the mild baby bear, the moderate momma bear, and the long-lasting papa bear. By the end of 2022 it is believed that the market environment outlook will reveal itself more clearly – good, bad, or somewhere in between. Below are explanations for each scenario:
The mild bear: Interest rates do not have to go much higher, inflation recedes quite quickly in response to rate rises, and economic growth remains generally solid.
The moderate bear: We could experience a mild recession, where interest rate rises are soon sufficient to gradually slow the economy and tame inflation from current elevated levels. The expectation is for a few quarters of slowing growth, with inflation gradually inching down, before ultimately seeing early signs of a recovery.
The longer lasting bear: An environment in which uncertainty continues to prevail, where the Federal Reserve is unable to gain control of inflation, and it remains unclear how high-interest rates will need to go in order to reinstate price stability. In this environment, the market continues to fluctuate, and volatility remains prevalent.
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This article was released by T. Rowe Price for use by your local Cambridge Investment Research Financial Advisor.
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