Pain, few gains for investors as markets slumped during 2022
Investors found few, if any, places to safely put their money in 2022, as central banks in the U.S. and around the globe raised interest rates for the first time in years to fight surging inflation, stoking fear of a global recession.
Uncertainty about how far the Federal Reserve and other central banks would go in the fight against inflation sparked a return of volatility. Large swings in stocks were common on Wall Street as the Fed raised its key interest rate seven times and signaled more hikes to come in 2023.
Russia’s invasion of Ukraine and China’s strict COVID-19 policies also contributed to inflation and roiled the global economy as well as markets in Asia, Europe and the U.S.
On Wall Street, the benchmark S&P 500 index had its worst start to a year since 1970. By June, t he index fell into a bear market, a drop of more than 20% from the record high set in early January. The energy sector was the lone winner, benefitting from a spike in oil and gas prices. Technology stocks tumbled after leading the market during the pandemic.
Borrowing money got more expensive. The 10-year Treasury yield, which influences rates on mortgages and other loans, soared, reaching 4.22% in October after starting the year at 1.51%.
Still, climbing yields in the U.S. and abroad sent prices for older bonds already in investors’ portfolios sharply lower. The rout in bonds was particularly painful for fixedincome investors.
Cryptocurrency investors weren’t spared either. Bitcoin shed more than half its value and a number of high-flying companies wound up in bankruptcy court.
Here’s a look back on the key events in markets for 2022:
Inflation and the Fed
Inflation was the dominant global economic theme this year. Gasoline prices in the U.S. reached $5 a gallon. Companies either raised prices, or kept prices steady but put less in each package. Europe feared running short of natural gas and prices there rose more than in the U.S.
Central banks’ response to inflation overshadowed financial markets in 2022 and could very well do so again next year. As the year began, officials at the Federal Reserve had accepted that inflation was not a temporary phenomenon. Russia’s invasion of Ukraine only made things worse by sending energy and food prices soaring.
The long game, as always, is to keep the routes after the excitement calms down. Bradley is close but not yet back to prepandemic passenger numbers. Over at Tweed, startup Avelo Airlines built on its November, 2021 launch to end 2022 with 14 routes from New Haven. That brought Tweed to 600,000 passengers arriving and departing for the year as it looks to expand with a new terminal – without state aid.
4. Restaurants, subs drive jobs amid a recession watch
Connecticut employers added 36,000 new positions in the year ending in November, preliminary reports show. That’s a slower pace than the nation’s and we remain below pre-pandemic job levels but it’s far better than most years for the state. Unemployment fell to 4.2 percent from 5.2 percent, a faster decline than in the U.S. as a whole. The leisure and hospitality sector — think restaurant resurgence — led the job gains as the biggest problem in many industries was finding workers. Electric Boat continued its steady hiring as the U.S. Navy ramps up the sub fleet. No one knows how to view these job trends because we’ve never before come out of a pandemic shutdown. But the worry over finding workers could end abruptly in 2023 if we see a recession, as many predict. An early warning sign: Connecticut saw declines in the number of residents who said they were working in each of the last
5. Electric prices shock CT
The multi-headed inflation story pulled an unpleasant shocker on Nov. 17, when Eversource and United Illuminating told the state their prices for electric generation, passed along to most customers, would double starting Jan. 1, at least until July 1. The result: Residents who use the utilities as their electric suppliers will see price hikes of about 40 percent at Eversource and 35 percent at UI, a unit of Avangrid. That means most families will need to pay an extra $40 to $90 a month, depending on how much juice they use. I created a calculator so you can check your exact increase – but there’s no quick way to calculate the harm to the state’s prosperity in 2023. State officials took some steps and are taking more to circuit-break the bad news. On Tuesday, Jan. 3, regulators in three states haul Eversource into a hearing to do some ’splaining. Not that anyone can reverse the higher charges that take effect Sunday.
6. Opioid settlements end years of lawsuits
A landmark, multi-state settlement in March with Stamford-based Purdue Pharma and the Sackler family became the cornerstone of a series of shotgun agreements that culminated years of litigation with makers and distributors of opioid medications. Connecticut will receive $95 million of the $6 billion from Purdue and the Sacklers, a
nationwide deal negotiated by Attorney General William Tong, who’s also from Stamford. In all, the state will take in more than $600 million in the payouts, including separate deals announced this month with Walgreen’s and CVS totaling $127 million. The deals bring new protections against opioid abuse and raise hopes that the 21st century scourge will abate, a year after the 2021 tally of deaths in Connecticut reached a horrendous 1,413. The opioid cases are part of Connecticut’s long, deep dive into multistate, multi-year investigations including alleged price-fixing by generic drug-makers and multiple accusations of violations by Facebook and other social media companies.
7. Bank merger rough on People’s people
Connecticut, a hub of bank headquarters in the late-20th century, saw its largest homegrown bank cease to exist in 2022 as Buffalo-based M&T Bank swallowed People’s United Bank in an $8.3 billion deal. It did not go smoothly. When the merger was final on April 2 — with an obscene payout of $34 million to departing CEO Jack Barnes — the biggest worry was layoffs and the fate of the People’s Bridgeport headquarters. M&T said it would cut 747 Connecticut jobs, keeping about 2,000, but vowed to maintain a regional hub at the old head office. The real crisis came in September, when M&T merged former People’s United accounts into its system. Many customers couldn’t withdraw money, pay bills or get adequate assistance. Elected officials called for investigations by federal regulators. M&T promised to make it right and by year’s end,
the picture was stable.
8. Black Hawk contract down
Connecticut’s core identity as the aerospace and defense state didn’t crash on Dec. 5, when Sikorsky lost a competition to replace its storied Black Hawk helicopter. But over the decades, if the Army’s choice of Texas-based rival Bell to build the nextgeneration medium-lift attack rotorcraft holds up, the state’s prowess — and its manufacturing base — will surely take a hit. Sikorsky, a unit of Lockheed Martin, had teamed up with Boeing to pitch the Defiant-X, with more maneuverability but less speed than the tilt-rotor Bell V-280 Valor offering, which moves like an airplane in mid-flight. The first contract was for $1.3 billion but long-term sales of the Black Hawk replacement are estimated at $80 billion. No one can say how the loss would affect Sikorsky’s 8,500-person workforce in the main Stratford plant and in Bridgeport, Trumbull and Shelton, or its 280 in-state suppliers. There’s still years of work upgrading many of the 4,000 Black Hawk and variant aircraft that have been manufactured since the mid-’70s. And another competition against Bell will decide who gets to build the next scout helicopter. On Wednesday as the year approached its end, Lockheed and Boeing filed a protest — a move that has worked in the past including 15 years ago when Sikorsky snatched victory back from Boeing for a search-and-rescue craft.