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The Big Issues for 2022

Nobody knows what turn the pandemic will take or whether recent price increases will be transitory, which means that economic forecasting has become even more hazardous than usual. Still, some trends should be watched more closely than others, and some policies should change regardless of what happens.

LONDON – With the calendar year drawing to a close, the parlor game of pretending to know what will happen in the next 12 months has begun. Yet when it comes to 2022 (and beyond), I am not sure whether it is worth even pretending. I cannot recall a previous time when there were so many big question marks looming over so many key economic issues.

This deep uncertainty is especially intriguing with respect to financial markets. Should any of several developments to watch take a negative turn, the implications for today’s elevated markets could be dire.

Among the most urgent and topical issues, other than COVID-19, is inflation. Are this year’s price increases transient, or do they represent something more ominous? My useless answer is, “I don’t know.” Although I did suggest at this time last year that inflation would become a bigger issue than weak GDP growth, now, as I look ahead to 2022, I am far less sure.

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