Market Wrap up 2021

The Markets

2021 was a plentiful kind of year.

Everything seemed to move higher – from COVID-19 cases and vaccinations to economic growth and global stock markets. Everything except for optimism. As the year came to an end, a CBS News poll found that 40 percent of Americans felt 2021 was mostly filled with sadness, although almost three out of four people polled said they were hopeful for 2022.

As we head into the new year, let’s look back at 2021.

•    Vaccinations took off. At the start of the year, very few people were vaccinated against COVID-19. Despite issues with vaccine reluctance and availability, by the end of the year, more than 58 percent of the world’s population had received at least one dose of a COVID-19 vaccine.

The United Arab Emirates led the way with 99 percent of the nation’s population vaccinated. Nigeria lagged with about 95 percent of the population unvaccinated. More than 61 percent of Americans were fully vaccinated, and another 12 percent were partially vaccinated, according to Our World in Data.

•    United States’ economic growth was stronger than it has been in decades. In December, it was estimated the U.S. economy grew by 6.5 percent annualized in the fourth quarter of 2021, and 5.6 percent over the full year. That’s the strongest growth in decades, according to Ben Levisohn of Barron’s. The lesson “Don’t underestimate the resilience of the U.S. economy.”

•    Inflation rose faster than it has in decades. Consumer prices increased at the fastest pace since 1982. By December, prices were up almost 7 percent for the year in the U.S.

•    Consumer sentiment declined and then rose in December. Overall, consumers were less optimistic during 2021, largely because of inflation. About 25 percent of households said inflation was eroding their standard of living.

•    Major U.S. stock indices set records. After trading closed on December 31, 2021, “All three major U.S. stock indexes scored annual gains. It was a volatile ride often driven by the news media but well worth the wait.

•    Corporate earnings proved resilient. Despite supply chain issues, labor shortages, wage increases, and inflation, U.S. company earnings were exceptional. Earnings, which reflect company profits, were up 45.1 percent year-over-year.

•    Finding income in the bond market was challenging. The yields were low again and often the actual bond prices slipped down as well due to inflation. Bonds were once again one of the worst-performing sectors as opposed to stock. Gold also had a down year not providing the haven against inflation. It was -3.5% and -10.2% according to the Wall Street Journal.

THE LATEST FASHION: RESALE AND REUSE…If there was a spectrum that reflected the value and longevity of everything we owned, consumables (coffee and cell phones) might be at one end, durables (automobiles and appliances) in the middle, and items with enduring value (homes and collectibles) on the other end, according to The Economist.

Clothing might belong on different parts of the spectrum. Everyday socks might be on one end while Audrey Hepburn’s little black dress from Breakfast at Tiffany’s and Neil Armstrong’s Apollo 11 spacesuit ranged toward the other end.

Currently, people spend less on clothes, overall, but buy more than they once did. Often, items are worn a few times and then discarded. As a result, the fashion industry has a sustainability problem. The Economist reported:

“…industry studies reckon that clothing manufacture and distribution account for between 2% and 8% of global carbon emissions. The fashion industry probably emits more carbon than aviation (3% of emissions) or shipping (2%).”

With consumers prioritizing sustainability, fashion has begun to change. More people are cleaning out their closets and selling clothing online, according to the 2021 Resale Report. As a result, the resale clothing marketplace is expected to double, reaching $77 billion, during the next five years.

That may be the tip of the iceberg. Thirty-six billion pieces of clothing are thrown out by Americans each year, and estimates suggest that 95 percent could be recycled or reused.

Focus On The Positive
“Hope smiles from the threshold of the year to come,
Whispering ‘it will be happier’…”
—Alfred Lord Tennyson, poet