U.S. GDP strength may extend into 2022

Sources: Bloomberg, Wells Fargo Securities, and Wells Fargo Investment Institute. Quarterly data from October 1, 2015 to December 31, 2021. Q1 2022–Q4 2022 are Wells Fargo Securities forecasts, as of April 7, 2022. Forecasts are not guaranteed and are subject to change. GDP = gross domestic product. QOQ = quarter over quarter. SAAR = seasonally adjusted annual rate.

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Key Takeaways

  • The war in Ukraine and lingering aftershocks from the pandemic pose twin threats to rapid growth reinforced last year by successive rounds of fiscal and monetary stimulus during the opening months of 2021.
  • Recent headwinds to economic growth from the pandemic and the Russia-Ukraine war likely will test the stock market’s earnings-driven rally by supporting inflation, the Federal Reserve’s policy shift, and interest-rate increases capable of squeezing stock valuations.