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U.S., Michigan economy rallied in 2021, but inflation looms over 2022

Detroit, Michigan.
Detroit, Michigan.

Michigan’s economy – and the nation’s – made a strong showing this year, despite the impact of the coronavirus. But there may be trouble ahead in 2022.

Charles Ballard is an economist at Michigan State University. He says in 2021, the US made up the reduced gross domestic product it posted the year before and gained back nearly all lost jobs. But strong consumer demand coupled with a crippled supply chain system drove prices up, particularly in these past few months. Ballard says the inflation rate has risen at its fastest pace in 39 years. “Will that continue?  We’re not sure.  Much depends upon whether we can get these supply chains put back together and how fast we can do that,” said Ballard

Ballard believes the Federal Reserve will “tap the breaks” in 2022 with a series of small interest rate hikes. The Fed has also announced it will purchase monthly bonds at a slower rate.