Despite a year of record-high inflation and turbulent markets, it’s not all gloom and doom. The job market has remained strong with unemployment dropping to historic lows. Even with high real inflation, the long-term inflation expectations are well-anchored. Fortunately, the amount of money people have in pandemic-era savings is still solid, providing a cushion against higher energy and food prices. Similarly, US corporate profits are historically elevated, providing cushion in case of economic downside. While the strong dollar may be hurting manufacturing, it’s helping the consumer by making imports cheaper.

Sonia Meskin, Global Economics and Investment Analysis team, BNY Mellon Investment Management.