The 2022 economy: Inflation, housing prices, gas prices, and all the other forces that shaped our lives
We have survived the complicated, unnerving economy of 2022. But what have we learned?
Inflation emerged as the dominant theme, blanketing itself across millions of businesses and households. These higher prices manifested themselves everywhere, but they did not — at least not yet, it seems — pull the country into a recession. The economic forces were complicated and challenging. We aimed to bring them to life.
Through five vivid dispatches spanning from March until November, our Econ 101 series explored the roots of inflation, higher gas prices, rising rent, and the surging cost of food. But the series also, importantly, shed light on how the labor market could prove resilient and prevent inflation from dragging the economy into a recession. That labor market is now under new duress.
Chapter 1 | March 16
Inflation: How prices took off.
It contracted too fast. Then it grew too quickly. This forced millions of Americans to live through something they never have before: a period of high inflation. Our guide, published in March, explained what caused prices to take off.” class=”wpds-c-hcZlgz wpds-c-hcZlgz-bkfjoi-font-georgia wpds-c-hcZlgz-jDmrXh-width-mdCenter wpds-c-hcZlgz-iPJLV-css mw-md pb-md font–article-body font-copy ma-auto pl-sm pr-sm”>Over the past two years, the U.S. economy has faced its biggest challenges in a generation on multiple fronts. It contracted too fast. Then it grew too quickly. This forced millions of Americans to live through something they never have before: a period of high inflation. Our guide, published in March, explained what caused prices to take off.
What’s next: Many analysts say inflation will continue to cool, potentially reaching more normal levels toward the end of 2023. This inflationary stretch has been painful for many households and businesses, however. The Fed has begun showing signals that it could soon begin slowing the pace of interest rate hikes. They are concerned that if they raise interest rates too much, it could lead to a recession.” class=”wpds-c-hcZlgz wpds-c-hcZlgz-bkfjoi-font-georgia wpds-c-hcZlgz-jDmrXh-width-mdCenter wpds-c-hcZlgz-iPJLV-css mw-md pb-md font–article-body font-copy ma-auto pl-sm pr-sm”>What’s next: Many analysts say inflation will continue to cool, potentially reaching more normal levels toward the end of 2023. This inflationary stretch has been painful for many households and businesses, however. The Fed has begun showing signals that it could soon begin slowing the pace of interest rate hikes. They are concerned that if they raise interest rates too much, it could lead to a recession.
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Chapter 2 | June 1
Pump Shock: How gas prices drove us to the brink.
Rising inflation, a growing economy, people returning to offices, and a surge in people hitting the road for long-overdue trips helped push gas prices up near record levels. Making matters worse — a lot worse — was Russia’s invasion of Ukraine. Russia is the third-largest exporter of energy in the world, and the U.S. and European allies moved to punish Russia by limiting imports. This pushed up prices for everybody, particularly around the summer driving season.
What’s next: The White House says they want to keep exerting pressure on energy companies to lower gas prices, and Republicans have said a key part of their agenda in 2023 is to boost U.S. production so that there is more domestic supply. It’s unclear if either political party will have all that much power when it comes to energy prices. Bigger factors will likely be the extent of Russia’s involvement in Ukraine and the broader direction of the global economy. If the global economy slumps, gas prices will probably fall even more.” class=”wpds-c-hcZlgz wpds-c-hcZlgz-bkfjoi-font-georgia wpds-c-hcZlgz-jDmrXh-width-mdCenter wpds-c-hcZlgz-iPJLV-css mw-md pb-md font–article-body font-copy ma-auto pl-sm pr-sm”>What’s next: The White House says they want to keep exerting pressure on energy companies to lower gas prices, and Republicans have said a key part of their agenda in 2023 is to boost U.S. production so that there is more domestic supply. It’s unclear if either political party will have all that much power when it comes to energy prices. Bigger factors will likely be the extent of Russia’s involvement in Ukraine and the broader direction of the global economy. If the global economy slumps, gas prices will probably fall even more.
Chapter 3 | July 28
What causes a recession?
What’s happened since: The final domino to fall, though, was layoffs. Just when it appeared a recession seemed imminent during the summer, the labor market kept revving and employers kept hiring hundreds of thousands of people each month. With an extremely low unemployment rate — at one point it was 3.5 percent — consumers had plenty of income and didn’t need to pull back on spending as much as many economists had feared.” class=”wpds-c-hcZlgz wpds-c-hcZlgz-bkfjoi-font-georgia wpds-c-hcZlgz-jDmrXh-width-mdCenter wpds-c-hcZlgz-iPJLV-css mw-md pb-md font–article-body font-copy ma-auto pl-sm pr-sm”>What’s happened since: The final domino to fall, though, was layoffs. Just when it appeared a recession seemed imminent during the summer, the labor market kept revving and employers kept hiring hundreds of thousands of people each month. With an extremely low unemployment rate — at one point it was 3.5 percent — consumers had plenty of income and didn’t need to pull back on spending as much as many economists had feared.
Chapter 4 | Sept. 1
Why is rent so high?
As inflation unexpectedly picked up new momentum in the second half of 2022, housing costs emerged as a huge burden for millions of renters. Many were priced out of the white-hot housing market, and so they had to compete against more people to rent apartments or houses in virtually every corner of the country. There were many reasons for this, including that there was not enough supply to meet demand. And people were using the pandemic as an excuse to move and relocate, which caused a lot of volatility and in many cases created more competition for units.
month-by-month basis. That could bring welcome relief, particularly for people who are finding themselves priced out of the housing market by rising interest rates.” class=”wpds-c-hcZlgz wpds-c-hcZlgz-bkfjoi-font-georgia wpds-c-hcZlgz-jDmrXh-width-mdCenter wpds-c-hcZlgz-iPJLV-css mw-md pb-md font–article-body font-copy ma-auto pl-sm pr-sm”>What’s happened since: There are signs rental prices might finally be stabilizing, and prices fell in many markets in October on a month-by-month basis. That could bring welcome relief, particularly for people who are finding themselves priced out of the housing market by rising interest rates.
Chapter 5 | Nov. 10
Food-flation
Food prices jumped in 2022, but there were different reasons for different products. An avian flu outbreak pushed up the price of turkey and chicken. Heat waves and droughts in Idaho pushed up the cost of potatoes. Bread prices jumped because wheat exports were delayed by the war in Ukraine. Labor shortages, meanwhile, have pushed up the price of dairy products. Each item seemed to have its own issue, which drove up costs across the board.
What’s next: There are so many different dynamics driving up food prices that it’s hard to know when things will stabilize. But a number of experts say that food-price inflation is peaking, and there’s a chance that prices might actually fall in 2023.” class=”wpds-c-hcZlgz wpds-c-hcZlgz-bkfjoi-font-georgia wpds-c-hcZlgz-jDmrXh-width-mdCenter wpds-c-hcZlgz-iPJLV-css mw-md pb-md font–article-body font-copy ma-auto pl-sm pr-sm”>What’s next: There are so many different dynamics driving up food prices that it’s hard to know when things will stabilize. But a number of experts say that food-price inflation is peaking, and there’s a chance that prices might actually fall in 2023.
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