For the last time (this year), hi.
2021 wasn't the return to normal many of us were looking for. Vaccines and reopenings renewed hope that the pandemic was on its way out. But rising inflation, supply-chain issues, and new COVID-19 variants made for a bumpy ride toward economic recovery. (ICYMI, we Skimm'd this year in money earlier this week.) What's waiting for us in 2022? Let's take a look…
Slow your growth. GDP — one measure of a nation's economic health — soared in the US by more than 6% in each of the first two quarters of 2021. Then dropped to around 2% in Q3, thanks in part to the Delta variant causing a surge in COVID cases. As the economy keeps inching back to normal despite the latest Omicron threat, the Federal Reserve expects GDP to grow more moderately at 4% in 2022.
Inflation's duration. In November, the Consumer Price Index (which measures average prices of things like food and housing in the US) rose 6.8%, the biggest annual jump in 39 years. And inflation may not be as "transitory"* as previously expected. Economists say continuing supply-chain disruptions and labor shortages will keep driving up prices well into 2022.*
Cooler housing. Home buying will likely still be competitive — just not quite as brutal as it was in 2021. The supply of homes for sale is expected to increase slightly, aka not enough to meet demand and keep prices down. Home prices will climb 5.7% in 2022, according to a National Association of Realtors survey of experts, down from this year's double-digit spike.
Raises on the way. Workers are asking for better pay — whether it's from their current employers or their next ones — and many are getting it. (Only to be undercut by inflation.) Also on the rise: employment. The unemployment rate is expected to drop from 4.2% in November 2021 to 3.5% by the end of 2022, equal to the 50-year low last seen just before the pandemic.
Crypto crackdown. Regulations on digital currencies in the US could tighten next year. A crypto task force was recently formed to focus on investigating and prosecuting criminal misuse of virtual currencies and exchanges. What this means for crypto values is TBD. Expectations for where Bitcoin's price is headed are all over the place: Some say it's on course to hit $100,000 soon while others are bracing for a crash.
*PS: Not a Washington Post subscriber? Check out their exclusive offer just for Skimm'rs.
If rising prices are squeezing your budget…
Protect yourself. Inflation is likely to shape your finances in 2022. Stay a step ahead by making more room in your budget. A few ideas: cancel unused subscriptions, reduce and reuse what you already have, buy household items in bulk, and comparison-shop. For recurring expenses like insurance, internet, and phone bills, don't be afraid to negotiate.
If you've been telling your student loans, 'we were on a break…'
Keep your distance, if you need the space…until May 1. Last week, President Joe Biden announced an(other) extension of the interest-free pandemic pause on federal student loan payments. Because borrowers need more time to recover. Take the extra 90 days to get organized and ready for payments to start back up. Make sure you know who your loan servicer is (it may have changed). Then check in with your budget and see if your previous payment plan still makes sense. And see what else you need to know about managing your loans during the pandemic.
If a new car or home is on your 2022 vision board…
Prep for rising interest rates. The Fed has kept rates near zero to help support the economy through the pandemic. But inflation is running hot. To help cool down prices, the Fed is planning three rate hikes in 2022. That can be nice for your savings account, but not so much for your debt. Higher interest rates mean the auto loan or mortgage you were hoping to get — and any lingering balance on your variable-rate credit cards — will be more expensive. A bigger down payment upfront can help you borrow less and save on interest charges. And paying off your existing debt ASAP can help you avoid racking up more interest later.
If you're not sure what 2022 has in store for stocks…
Join the club. Even market pros are split on what to expect. But that doesn't mean your investing plans should change. If you're already focused on long-term goals (hello, retirement), keep saving and investing. And remember that diversification is your best friend. Spreading your portfolio across a wide variety of investments is the best way to up your odds of holding a winner, especially when the market feels uncertain.
If a big career move is in your new year plans…
Refresh your resume. A lot of people said 'byeeee' to their employers in 2021. And the trend is likely to continue in 2022 with the job market still tipped in favor of workers. Changing jobs every few years could = higher earnings. To compete with all the other jobseekers, make sure your resume stands out. A couple things to consider adding: if you're vaccinated. (One survey says a third of hiring managers eliminate resumes without a vax status.) And if you've shown you're a good remote worker. Oh, and make sure you're covered financially before you quit your current job.
If your password is still 'yourpetsname123'…
Change it up. Because cybercrime has been on the rise. About 281 million people were affected by a record number of data breaches in 2021. That means it's time to get strict with your personal info. Think: keeping a closer eye on your bank statements and credit reports, changing passwords and security question answers, and setting up two-factor authentication on your important accounts. If you think your identity's been exposed in a data breach or scam, add these steps to your to-do list.
Psst...if you've got money moves in your sights, you'll wanna know about the Fidelity Spire® app. It lets you plan, save, and invest in one place. So you can navigate your finances with confidence. Check it out.
Being popular isn't everything. But shoutout to this year's most-clicked Skimm Money stories. You go, Glen Coco.
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Skimm’d by Casey Bond, Liz Knueven, Kamaron McNair, Stacy Rapacon, and Elyse Steinhaus
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December 17 | Fed meeting recap plus tips for giving back.
December 10 | More inflation, plus money-saving tips
December 3 | New month, new jobs, new variant.