July 13, 2022
(Our midyear 2022 economic outlook pages reflect the house view of Vanguard’s global economics and markets teams as of July 7, 2022.)
Our economic and market outlook for 2022 emphasized the need for policymakers to strike a better balance between reining in inflation and supporting economic growth. Events so far this year have vastly increased policymakers’ challenges.
As Joe Davis, Vanguard’s global chief economist, explains in this video, soft landings—in this case, tamping down inflation to acceptable levels without choking off growth—are hard to achieve.
But recession isn’t a foregone conclusion in the world’s largest economies. This update to our 2022 economic outlook summarizes our views at midyear.
Recession probabilities for select regions
Vanguard believes that recession is more likely in the euro area and the United Kingdom than in the United States in the next 12 months, but that it becomes likely in all three regions in the next 24 months
Source: Vanguard, as of July 7, 2022.
Notes: All investing is subject to risk, including the possible loss of the money you invest.
A closer look
A U.S. “soft landing” is looking less likely with the Federal Reserve’s higher policy rate landscape.
Our outlook for the euro area has been downgraded amid energy prices sent soaring by war.
China’s growth target of about 5.5% is vulnerable given the weak labor market and slowing global growth.
10-year asset-class returns
Falling equity valuations and rising interest rates have largely increased our return forecasts.