U.S. and Michigan economies recover in 2021, but inflation threatens 2022

The economies of the United States and Michigan have performed strongly this year, despite the impact of the coronavirus. But there could be problems ahead in 2022.

Michigan State University economist Charles Ballard said that in 2021 the United States made up for the reduction in gross domestic product it posted the previous year and recouped almost all of the lost jobs.

However, strong consumer demand coupled with a crippled supply chain system has driven prices up, especially in recent months.

Ballard says the inflation rate has increased at its fastest rate since 1982.

“Is this going to continue? We’re not sure, ”he said. “It all depends on how quickly we can get these supply chains back together. “

Ballard believes the Federal Reserve will “put the brakes on” in 2022 with a series of small interest rate hikes.

“I think what they’re trying to do is a delicate balance where they relax their expansionary policies and try to curb some of the inflation without tipping the economy into a recession,” he said.

The Fed also announced that it would buy monthly bonds at a slower rate.

Ballard predicts that some sectors, like digital electronics, will remain strong. He thinks others, like the commercial real estate market, might not fare as well as more Americans continue to work from home.