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First Quarter 2022 Executive Summary

Quarterly Executive Summary

We ended 2021 anticipating a “less remarkable” year ahead.  With strong economic fundamentals, we emerged from a two-year global pandemic with optimism, and we looked forward to continued growth (albeit more normalized) and calming interest rates.

And then in February, Russia’s invasion of Ukraine sent shock waves through the world.   In addition to senseless destruction, unthinkable human suffering and widespread loss of life, the tragedy in Ukraine also brought inflation, as war often does.  Russia is an important global energy and commodity producer (as is Ukraine -- the second largest country in Europe, right behind Russia).  And just when pandemic-related supply chain issues were dissipating, the war in Ukraine delivered a one-two punch to the global economy, with a commodity supply shock reigniting supply disruptions and pushing prices to extreme levels, exacerbating already rising inflation.  The full impact has yet to be seen; but while the duration and severity are unpredictable, undoubtedly this tragedy will continue to fuel global economic hardship.

Concerns over the economic implications of the war in Ukraine brought chaos to the stock market during Q1, with major indices hitting “correction” territory (traditionally a decline of at least 10% from recent highs).  And worse, the NASDAQ entered a “Bear Market” (a decline of at least 20%).   A rally in March significantly reduced the quarterly decline, and even the NASDAQ finished the quarter with “only” single-digit losses.  Impressive?   Yes, but whether this rally will continue is anyone’s best guess.  Another validation for “staying the course” and adhering to a disciplined, long-term investment strategy.

As inflation continued to rise, looking more problematic than transitory, the Fed began to tighten monetary policy.  At the March meeting, the target rate was increased 0.25% (its first increase since 2018), and the Fed set expectations for continued hikes.  The Fed will be walking a fine line between trying to tame inflation with rising rates and supporting growth with lower rates.  In his post-meeting statement, Chairman Powell stated “The committee is determined to take the measures necessary to restore price stability.  The U.S. economy is very strong and well-positioned to handle tighter monetary policy.”  

Fundamentals support Powell’s statement that the economy is strong.  Yes, prices are rising faster than they have in decades, but most economic data points to continued growth.  Q1 earnings are on track to beat the estimates.  GDP growth, while down from previous quarters, is expected to remain positive. Unemployment continues to fall.  Households and businesses have money to deploy.  And while the outcome in the Ukraine is highly uncertain, historically geopolitical crises have an intense but relatively short-term impact on markets.    

And so, as we navigate the remainder of 2022, we stay the course, pray for the people of Ukraine and continue to enjoy life to the fullest, even in these uncertain times.  

“Don’t wait for things to get better. Life will always be complicated. Learn to be happy right now, otherwise you’ll run out of time.” – Anonymous 


Recent Economic Data: 

Gross Domestic Product (GDP).  The GDPNow model estimate for real GDP growth in the first quarter of 2022 is 1.1%, (seasonally adjusted annual rate; estimate released April 8, 2022), down from an annual rate of 6.9% for Q4 2021.

Unemployment.  The unemployment rate declined to 3.6% in March, down from 3.9% in December 2021. 

Consumer Confidence.  The Conference Board Consumer Confidence Index, an indication of consumer attitudes and buying intentions, now stands at 107.2, down from 115.8 at year-end (1985=100) but holding up remarkably well considering Q4s geopolitical uncertainties and rising inflation. We expect these factors to continue to whittle away at Consumer Confidence in the coming quarter.    

Consumer Price Index (CPI).  The CPI for All Urban Consumers (CPI-U), a measure of inflation which shows “cost of living” fluctuations, increased 1.2% in March on a seasonally adjusted basis, and for 12 months ending March the CPI-U increased 8.5% before seasonal adjustments, the largest 12-month increase since 1981.  Not surprisingly, fuel, food and shelter account for much of the increase.   

Earnings.  For Q1 2022, the estimated earnings growth rate for the S&P is 4.5%, more normalized historically, but a significant decline from 2021’s extraordinary growth of more than 45% -- keeping in mind that last years’ above-average growth had the advantage of being compared to weaker earnings in 2020 due to the negative impact from Covid.  

Housing.  Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,793,000, down from year-end, but 3.9% higher than March 2021. Builders’ confidence decreased to 79 in March but remains positive (any reading above 50 is considered positive sentiment).  Rising mortgage rates and construction costs (up 20% over the past 12 months) are taking their toll, however; low inventory and high buyer demand continue to fuel the market.


March 31, 2022

Q1 Return







S&P 500




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The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.