Apr 28, 2022 - Economy & Business

Why the 2022 market could end like 1982

Illustration of the U.S. flag with one stripe moving upward like a chart trend line
Illustration: Sarah Grillo/Axios

Relentless inflation, geopolitical turmoil and slowing growth have drawn comparisons to the “stagflation” of the 1970s. Yet the more apt comparison might be the year 1982.

  • Like today, 1982 was characterized by “tense" Russia relations, surging commodity costs, and contentious midterm elections. Then, as now, soaring prices had consumers in a glum mood and the Fed on a tightening path.

Why it matters: 1982 started out rocky, but it ended on a cheery note, according to Baird analyst Ross Mayfield.

What they’re saying: “...It is noteworthy that like many other midterm years, the 1982 market rallied into year-end once some of the political uncertainty abated,” Mayfield wrote in an analysis of Strategas data.

  • Midterms "tend to feature some of the biggest selloffs and highest volatility of any year in a Presidential cycle, but investors who stay the course are... rewarded with strong outperformance as a result,” he added.
  • "[T]he market persevered the 1982 environment, rallying into year-end and ultimately kicking off a multi-decade bull market that lasted until 2000," Mayfield says.

Our thought bubble: We don't know what will happen later this year. But as we learned during the 2020 bear market that birthed the current bull run, it's always darkest before the dawn.

Go deeper