Fear is an interesting phenomenon when it comes to the economy. Certainly, the economy has dealt with a lot of fear in the past two years as the pandemic has raged on. With the advent of vaccines, some of this fear has waned, as more and more Americans are venturing out despite the threat of variants. If you go to a grocery store in most areas of the country, masks are a very common sight. Less fear, but not fearless.
There are additional fears we are dealing with at the present time. One was recently cited by an economist with First American Title, as they described the potential real estate market in early 2022. That fear is FOMO—the fear of missing out. With mortgage rates rising this year, it is expected that many will rush to purchase before owning becomes more expensive due to higher interest rates. It is hopeful that some sellers will also be motivated to list their homes at the same time, thus alleviating the concurrent inventory shortage.
Then there is the fear of “stagflation.” We are already dealing with surging inflation, which has caused interest rates to rise ahead of the Federal Reserve removing stimulus from the economy. Thus far, this inflation has been caused by spikes in demand, such as within the aforementioned real estate market. But what if the economic recovery slows down this year and inflation remains an issue? If this happens, you will hear the term “stagflation” bantered about more and more. We are not saying this will happen, but just another one of those fears that exists in today’s economy.