Massy: What are our perspectives on the global economy and how do you think these trends are going to impact the markets?
Greg: Well thanks for that question. I mean there's a number of things. First and foremost is really this aspect of we've been in an environment where there's been a tremendous amount of fiscal as well as monetary policy support in the marketplace, and that's really had an impact in terms of getting the economy running again while we're going through the midst of just a tremendous pandemic.
But what we're expecting as that policy's starting to get normalized over time, what we're expecting is more moderate economic growth, both in the U.S. as well as Europe where we're expecting about 4% or so in terms of economic growth. Even places like China that have historically had gangbuster type economic growth, we're expecting growth to slow down there as well to around 5% or so.
And then when we think about the higher levels of inflation that we've already seen because of supply chain disruptions and things of that nature, we are expecting that to start to moderate over the course of the next couple years. So when you think about our views that, again, we're not expecting the type of inflationary environment that we saw in the '70s where inflation was rising in double-digit rates. That's just not in the cards and not what we're forecasting.
Now, if we were to translate that in terms of what that means from a broad asset class return perspective, the first place that you have to start is really with valuations. And so when you look at where the equity market is today, valuations in U.S. equity markets do look stretched to us. They're at the highest levels we've seen since the dot.com era of the early and late '90s.
And so those types of things are, again, going to drive returns and our return expectations for the next decade or so. So when we look at U.S. markets, we're thinking that over the next 10 years or so, that investors should expect 2 to 4%, somewhere in that type of range as our base case for equity market, U.S. equity market returns per year for the next decade or so.
Again, if you look at 2021 where we had a return in the S&P of close to 28%, you know, again, those are not sustainable returns. We were very fortunate in terms of what the equity markets have produced, not just last year, but the last decade. So it's very unlikely that we're going to see the same type of returns going forward.