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October 29, 2021
U.S. businesses should expect costs such as insurance, shipping, health care and energy to increase in 2022, according to an Oct. 12 Kiplinger report. Key interest rates including the 10-year Treasury note will also edge up amid growth in the GDP, consumer spending and wages, per Kiplinger.
Here’s a comprehensive look at Kiplinger’s business cost forecasts for next year.
The report predicts GDP growth of 5.5% in 2022, with consumer spending increasing 4.7% due to fewer coronavirus infections coupled with big federal government spending. Kiplinger also forecasts a 13% jump in corporate earnings.
Inflation – After a 5.3% rise expected in 2021, inflation will still run hot at around 3% at the end of 2022. Pent-up consumer demand and government spending will continue to pressure prices.
Cost to borrow – The cost of borrowing is expected to edge up, with the 10-year Treasury note rate set to rise to 2.3% by 2022’s end. The 30-year fixed mortgage rate will climb to 3.8% next year, but the prime rate is likely to stay unchanged at 3.25%.
Unemployment – The unemployment rate will fall below 4% before the end of 2022.
Labor – A tight labor market will push average pay hikes to 3.5% after 2021’s 4% spike.
Wages –Strong wage gains will continue for production jobs in sectors such as construction, manufacturing, retail, food service and travel. But this will only be the case until the high job opening rate declines. Demand for these workers will grow higher in the first half of 2022 as the number of coronavirus infections tapers and the service sector opens more fully.
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