First Quarter Outlook Lowered

“Just lower it a little,” my dad would say when I would repeatedly pattern a rifle high. It was easier to said than done.

Economic analysts have lowered growth expectations for the first quarter of 2022. Facing a headwind as buyers struggle with high inflation and higher Covid-19 infections, and companies contend with rising labor costs and supply train problems.

The Wall Street Journal surveyed 69 business, academic and financial analysts between January 7-11. They cut their growth expectation for the first quarter by almost a third, to an annual rate of 3% instead of their forecasted 4.2% from their October survey. This just shows how difficult the balance is for the US economy. It could go either way this winter.

At the same time, Chairman Powell and the Federal Reserve is under pressure from companies and buyers to get inflation under control. Even President Biden pointed a finger at the Federal Reserve when he was asked about inflation.

With inflation rising at the fastest rate in almost forty years the Fed might be forced to be more aggressive on raising short-term interest rates than they want to, which risks a recession. They are caught between not raising interest rates fast enough to contain inflation or raising them too quickly which would shake up the markets as well.

It’s the first time in decades that the Federal Reserve has had to chase down inflation. There’s chance everyone who worked on it last time has retired so let’s hope the new ‘kids’ are up to the test. Most analysts I’m reading expect the Fed to raise rates at its policy meeting on March 15-16 and do it two more times over the year.

I’m still a gun guy through and through. Its that country layer under all those degrees. But these days shotguns are my weapon of choice. I don’t have to worry about lowering my aim as much. Hopefully, the rest of the years outlook won’t have to lower much either.

Have a blessed week!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance (IAA), a registered investment advisor.

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