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2021: Year in Review

Volume 93 No. 1 - January 2022

01-2022 Newsletter
Download PDF • 322KB

Before we move into 2022, we pause to look back on 2021, what we leave behind, and what we carry forward into a more hopeful future.

Common wisdom tells us that it often takes years, sometimes decades, to develop the perspective we need to look back at past events and appreciate history’s long curve. Although we are just two years into our new decade—which we dubbed the Roaring Twenties in our January 2020 newsletter—we know now that the pandemic and its economic and financial impacts will linger long into these upcoming months and years. We have also witnessed the acceleration of social change, thanks to COVID-19.

Many of these changes will impact the way we live, perhaps for decades into the future.

How did 2021 change us? Let us start with the economy:

The US economy surged back

According to data released by the US Bureau of Economic Analysis, in 2021, the US economy grew by 6.3% in Q1, 6.7% in Q2, and 2.1% in Q3, at seasonally adjusted annualized rates. In any other year, growth at these levels would have been remarkable and we have to go back to 2014 before we see similar levels. 2021 has not been “any other year.” We’re still very much in the heart of a pandemic and its emerging aftermath.

Much of last year’s economic growth came bolstered by pandemic-era stimulus packages, discussed in our February and April newsletters. In the wake of the $2.2 trillion CARES package and the $900 trillion December 2020 stimulus package, we explored the resulting short-term gains against their potential long-term costs. We called it the Sugar High effect and noted that “the stimulus funds seem to have succeeded in fending off the worst economic effects of the pandemic for many.”

We then stated that the result of the stimulus packages may well be “a combination of higher inflation, higher taxes, and lower government services.” With our April newsletter, we explored the $1.9 trillion American Rescue Plan and how it would create a short-term euphoria that’s not sustainable in the long term—like trying to get through the day on a box of candy bars.

As we end 2021, the stimulus packages have succeeded in stimulating the economy. The November 2021 Infrastructure deal will pump $1 trillion into transportation, broadband, and utility improvements. Unemployment is down. Wages are rising, replacing stimulus package money and strengthening consumer spending. No new tax increases were passed in 2021.

The year-end economic picture is not all white clouds and sunny skies, however. Confidence in the economy, measured by Gallup in October, has fallen to levels not seen since the first months of the pandemic, mainly due to our next topic.

The rise of inflation

Interest rates stayed low in 2021, but inflation returned, and with force. As consumer spending surged following the end of pandemic lockdowns, exploding demand met supply-side challenges exacerbated by worker and resource shortages.

While the Federal Government’s stimulus packages managed to avert many worst-case scenarios in the US economy, core and headline inflation began surging during 2021to levels not seen in years. When we examined the coming of inflation in our July 2021 newsletter, it was thought to be transitory.

By the time of our November 2021 newsletter, however, it had become clear that transitory inflation was becoming persistent. Consumers felt inflation at the gas station, grocery store, even at the hardware store.

For the twelve months ended November 30, the consumer price index for all items rose 6.8%, the biggest jump since 1982. Inflation may linger into the new year, but this will depend on what happens to supply constraints and the strength of our economy’s GDP growth.

How the 2020s have changed us

As of this writing, U.S. COVID cases now number 55 million. Of these people that have contracted COVID, over 800,000 have lost their lives. Entering 2022, there’s little doubt that this pandemic will remain a generational event that has long-standing repercussions in our society and culture.

The COVID-19 pandemic has brought many changes to our society, as we outlined in our June 2021 newsletter. First, during times that can feel very divisive, the pandemic has exposed our vulnerability. Our quarantines and lockdowns have shown us that we need each other—as part of the human condition. Second, for all the technology we have developed since the last great pandemic, a century ago, we were still unable to stop COVID-19 and its variants from spreading across the globe. We are indeed connected and even the most determined preventative controls to stop infection’s spread proved futile against its steady march across the world.

Medicine and technology have come to our aid. Despite the world’s much larger population now than at the time of the Spanish Flu, COVID has killed some 5.4 million people to date worldwide, much less than the estimated 50 million people who died during the 1918 epidemic. At least some of the credit for this reduced death toll goes to the quick development and distribution of the vaccines, something that was not at all possible in our grandparents’ time.

COVID also changed the way we live, work, and connect. Work grew more remote and the dividing line between work and home faded as we were locked out of our offices for a large part of the pandemic. We grew more comfortable with platforms that allow us to connect remotely. These things will likely not change, even when the pandemic becomes less of a central issue. These new work realities will affect residential and commercial real estate for years.

Looking ahead to 2022

History is an imperfect predictor of what’s to come. In 2022, we will face important national and state elections that will help determine the course of politics and policy in the coming years. We will likely face new variants and potentially new challenges in addressing health risks and balancing these against financial and social risks. Economically, we face the aftereffects of the sugar highs we created during the worst of the pandemic—in the form of labor shortages, supply-side issues, and inflation. However, the increasing vaccinations and decreasing shutdowns we saw in 2021 bode well as we head into a new year.


Happy 2022! At Investment Counsel, we exist to help you. A new year often marks an opportune time to review and set your investment objectives, as we examined in-depth in our December 2021 newsletter. We are glad to answer any questions or simply have an updated discussion on your investment goals and objectives.


Investment Counsel Inc., a Division of LaFleur & Godfrey, is a registered investment adviser. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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