Page 7 - ISQ July 2022

INVESTMENT STRATEGY QUARTERLY

Income Growth Outpaced Cost Growth Since 2020
$35,000 Wages have increased significantly since the pandemic began,
and despite the recent levels of inflation impacting cost of living, the
$30,000 majority of the population is in much better shape than it was.

$25,000

$20,000

$15,000

$10,000

$5,000

Top Quintile Fourth Quintile Middle Quintile Second Quintile Lowest Quintile

Source: FactSet as of 21/6/2022 Cost Income *Income does not include Government assistance

KEY TAKEAWAYS:
The Western developed economies are still fairly resilient,
the jobs market is strong, especially in the UK and US and • Surging global inflation, hawkish central banks,
many of the wealthiest are flush with cash ready to be supply chain struggles, a war between Ukraine and
deployed. Russia, and China’s zero-COVID policy are just some
of the many factors negatively affecting the world’s
economic outlook.
estimate their expenses have increased. Additionally, more • Monetary policy will remain on a tightening path until
people have the ability to work remotely nowadays than they the end of this year, when we believe the Fed will
did back then, reducing or eliminating their commute to work revise its views on further policy tightening in light of
and consequently reducing their gasoline expenditures. incoming information on inflation.

• Western populations have seen their net worth surge
BOTTOM LINE: significantly since the pandemic began, but the truth
Will there be a recession in the US or in Europe and when will it be? We is, most people don’t live off their net worth.
don’t know, but recessions have occurred many times in the past and
will occur again in the future. However, if one were to come along in • If a recession were to come along in the near future, it is
the near future, it is likely that it won’t be as strong as the Great likely that it won’t be as strong as the Great Recession,
Recession, but rather a mild economic slowdown due to the effects but rather a mild economic slowdown.
of tighter monetary policies. The Western developed economies are
still fairly resilient, the jobs market is strong, especially in the UK and
US and many of the wealthiest are flush with cash ready to be
deployed. However, business investments should be paid close
attention to, as repeated changes in some of its components could
signal troubles ahead.

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