Economic Outlook - January 2022
- U.S. job growth registered its smallest monthly gain over the past year while the unemployment rate fell more than forecast to 4.2%. Nonfarm payrolls climbed 210,000 in November after upward revisions to each of the prior two months. The drop in the unemployment rate and rise in labor force participation should help to keep the Federal Reserve on track to tighten monetary policy in 2022, as inflation has proven more persistent.
- U.S. home sales remain strong, with sales of existing homes rising 1.9% in November to an annual pace of 6.46 million units. That is a pace slightly slower than a year ago, but still robust. The median price of homes sold during November reached $353,900, a 13.9% gain from 2020.
- Orders placed with U.S. factories for durable goods rose in the most recent report by the most in six months, exceeding forecasts and pointing to steady demand that should help drive production growth in early 2022. Bookings for all durable goods, items meant to last at least three years, increased 2.5% from the prior month.
- Consumers were more upbeat in December, which should continue to support discretionary spending in the final quarter of the year. The consumer confidence index jumped by almost 4 points to 115.8 in December, the highest reading since July. The improving outlook for employment and the economy supports consumers and suggests resilience in the recovery, despite growing concerns about the omicron variant and elevated prices.
- At its most recent Federal Reserve Board meeting, the rate-setting committee announced that it will accelerate the end of its bond buying program, wrapping up by March instead of June, in order to clear the way for the Fed to lift off interest rates from near zero, where they have been held since March of 2020.
- Real gross domestic product (GDP) increased at an annual rate of 2.3% in the third quarter of 2021, following an increase of 6.7% in the previous quarter. The Conference Board forecasts GDP growth of 6.5% in the 4th quarter and 2022 growth in the 3.5-4% range.
Sources: Bloomberg LLC, FactSet, U.S. Commerce Department, Bloomberg Businessweek
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