Market Analysis- Fourth Quarter 2021
4th Quarter Market Analysis
Inflation was the main character of 2021 as prices began rising rapidly driven by high demand and short supply. The Fed expected bottlenecks would be temporary, but they proved persistent. By November, the core Personal Consumption Index (PCE) was the highest in over three decades at 4.6% year-over-year. At the November FOMC meeting, the Fed announced it would start tapering asset purchases to end in June 2022, but by December they announced a faster taper timeline and hinted at faster rate hikes.
The rapid spread of the Omicron variant caused record-high cases exacerbating staffing shortages and other supply-side issues, but not upsetting markets. The Build Back Better spending bill has stalled for now, but Congressional leaders promise to keep trying.