Below is Gardner's forecast for economic growth through the end of 2022.
The impacts of Covid-19 are going to continue to act as a drag on virus sensitive consumer services next year and ongoing supply chain issues will also delay inventory restocking. Both of these have a depressing effect in more ways than one on economic growth.
Gardner doesn't see any chance of falling back into a recession. The country has added around 200,000 jobs per month. He expects to see the country return to pre-covid employment levels in the second half of the year. With jobs continuing to return he predicts the unemployment rate will trend lower.
With the expiration of enhanced unemployment benefits and with wages rising significantly, prospective jobs for people currently unemployed are looking rather good.
The labor force is still down by 3 million, and businesses are still having trouble finding employees which raises the expectation that inflation will remain higher for longer. Here is his final economic forecast is his outlook for inflation.
Turning the attention to the housing market, Gardner does not expect to see an increase in existing homes sales, mainly due to ongoing supply limitations and rising affordability issues. Prices rose by 16.4% in 2021, this pace of appreciation has never been seen before. This pace of growth is unsustainable and he expects to see the pace of growth slow to a rate of 7.3% in 2022.
Mortgage rates are expected to raise in 2022, but he does not expect them to break 4%.
Although, these rising rates will also price some Buyer's out of the market. Slowing growth in existing home prices and sales will be a function of additional supply.
This chart shows Gardner's forecast for new home starts:
While Gardner does not predict we are in a housing bubble, he does voice concern about the affordability issues particularly for millennials. This generation is getting older and will begin to have children, but fears many of them will not be able to afford a home in this market.