It’s the time of the year when I look back at how far we’ve come since January a year ago. Here are seven economic trends that helped shaped personal finances for 2021.
Pandemic persists. A year-ago, we were hoping for wide-spread distribution of COVID-19 vaccines, and we got that. Remarkable! We also hoped for herd immunity to make COVID-19 mostly go away and we could return to normal. That didn’t happen. First the delta variant and then the omicron variant ensured economic activity did not return to anything like normal and makes the future murky. Because the pandemic persists, two significant economic forces emerged.
Supply chain interruptions. Everything from bathroom fixtures lost on a boat somewhere, to toy shortages at Christmas, to lumber shortages that slowed house remodels affected us all in one form or another during the year.
Talent shortages. One report recently showed 40% of employees said they are likely to quit their jobs in the next 3-6 months. This spurned a new term – the “Great Resignation” entered our consciousness. Every employer from McDonald’s to Apple is facing a talent shortage with no end in sight.
Digital domination continues. Technology continued to immerse itself in our lives. Self-driving cars moved closer to reality, more cloud computing and enhanced communications via technology altered the way we work, play and live. With the increased role of technology came increased emphasis on cybersecurity. Ransomware surged. Thieves use ransomware (malicious software) to take over a victim’s computer systems and block access to it unless the victim pays a ransom. Corporate victims in 2021 included Kia Motors, the Washington DC Police Department and Colonial Pipeline.
Sustainability moved a few steps forward. Environmental, Social and Governance (ESG) investing is when investors use social criteria to choose investments. According to a report in CNBC, investors are piling into ESG investing. In the third quarter of 2021, ESG mutual funds and ETFs gained $15.7 billion. The total ESG investing pool is now over $330 billion. However, the UN published its long-awaited report on climate change in August and the news is not good, but not hopeless either.
Inflation and the Fed. For the first time in more than 30 years, inflation came roaring back into our lives. We all feel it in the price of goods and services. The Fed has promised action in the form of future interest rate increases.
Digital currencies. There are now over 7,000 digital currencies and the media is making sure we all know about them. Reacting to FOMO (fear of missing out) and responding to greed, un-aware people are jumping into a sea of digital currencies un-aware of the risks.
What economic forces most affected you in 2021? What do you expect in 2022? Will current trends continue and what new forces do you expect? Please comment on this post and let’s compile our collective wisdom.
Next time: My fearless 2022 Predictions