What to Expect in 2022:
A recent article I came across addressed several challenges that we may be facing in 2022 and after the unique problems of 2021 I thought it may be worth looking at the year ahead.
This forecaster is seeing the economy slow down in 2022. While a double-dip recession does not look like it’s in the picture, the hot economy of 2021 will see a statistical normalization- a return to the mean. While that may mean less business, there is a silver lining: a lot of the supply chain problems the industry has been facing will have the space and time to work themselves out. Housing, in particular is already starting to slow down.
The US GDP saw a dip in Q4 of 2019 due to Covid then things fell off a cliff in 2020-but we manage to rebound and contracting helped to lead that rebound. A lot of people staying at home during the pandemic meant a lot of people chose to improve their homes. The new “work from home” directives meant a lot of workers were suddenly free to work from anywhere and many chose to change homes. A lot of people left urban areas because the thing that attracted them to cities were no longer part of the equation.
GDP is going to decline and there will certainly be some “doom and gloom” in the business media but we will still see top-line growth just at a much slower pace than we experienced last year. This forecaster predicts that by 2023/2024 the US economy will be ready for a new cycle of expansion and growth.
Businesses were cautioned to be wary of the coming year because volume of work will simply not be the same. Consumers are coming back down to earth and the biggest culprit is inflation. He commented that 2% inflation is comfortable for most people but 5%-6% inflation rates is not good especially with wagers only increasing at 1% pace.
Another concern is a tightening labor market. It’s almost impossible to hire people at any position. For every job offer there is something less than one person (0.8%) chasing that job. Significantly for the skilled trades, the largest draw-down in labor participation in the last two years have been people over 60 who are choosing to retire or take early retirement. This labor market will continue to remain a thorn in the side of every contractor in the coming year.
Supply chain issues will continue in 2022 but will start to level out as we get deeper into the year. However, things will get worse before they get better, but they will get better.
Building and housing markets has seen historic highs. It is a very consumer driven market and many contractors are working at full capacity. The commercial side of the industry has probably seen the work and worked through it. The commercial market actually looks better for 2022/2023.
Best wishes for 2022 and looking forward to taking on another year together!!