Comparing the Speed of U.S. Interest Rate Hikes (1988-2022)
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Comparing the Speed of U.S. Interest Rate Hikes (1988-2022)

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Line chart comparing the speed of interest rate hikes over cycles since 1988. The 2022 cycle is the fastest with the effective federal funds rate rising 2.36 p.p. in six months

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Comparing the Speed of U.S. Interest Rate Hikes

As U.S. inflation remains at multi-decade highs, the Federal Reserve has been aggressive with its interest rate hikes. In fact, rates have risen more than two percentage points in just six months.

In this graphic—which was inspired by a chart from Chartr—we compare the speed and severity of the current interest rate hikes to other periods of monetary tightening over the past 35 years.

Measuring Periods of Interest Rate Hikes

We used the effective federal funds rate (EFFR), which measures the weighted average of the rates that banks use to lend to each other overnight. It is determined by the market but influenced by the Fed’s target range. We considered the starting point for each cycle to be the EFFR during the month when the first rate hike took place.

Here is the duration and severity of each interest rate hike cycle since 1988.

Time PeriodDuration 
(Months)
Total Change in EFFR
(Percentage Points)
Mar 1988 - May 198914 3.23
Feb 1994 - Feb 1995122.67
Jun 1999 - May 2000111.51
Jun 2004 - Jun 2006243.96
Dec 2015 - Dec 2018362.03
Mar 2022 - Sep 2022 62.36

* We considered a rate hike cycle to be any time period when the Federal Reserve raised rates at two or more consecutive meetings. The 2022 rate hike cycle is ongoing with data as of September 2022.

The 2022 rate hike cycle is the fastest, reaching a 2.36 percentage point increase nearly twice as fast as the rate hike cycle of ‘88-‘89.

On the other hand, the most severe interest rate hikes occurred in the ‘04 – ‘06 cycle when the EFFR climbed by almost four percentage points. It took much longer to reach this level, however, with the hikes taking place over two years.

Timing Interest Rate Hikes

Why are 2022’s interest rate hikes so rapid? U.S. inflation far exceeds the Fed’s long-term target of 2%. In fact, when the hikes started in March 2022, inflation was the highest it’s ever been in the last six rate hike cycles.

Time PeriodInflation Rate at Start of Cycle
Mar 1988 - May 19893.60%
Feb 1994 - Feb 19952.06%
Jun 1999 - May 20001.40%
Jun 2004 - Jun 20062.89%
Dec 2015 - Dec 20180.30%
Mar 2022 - Sep 2022 6.77%

Inflation rate is the year-over-year change as measured by the Personal Consumption Expenditures (PCE) Index.

In contrast, three of the rate hike cycles started with inflation at or below the 2% target. Inflation was just 0.30% in December 2015 when the Fed announced its first rate hike since the global financial crisis.

Some criticized the Fed for raising rates prematurely, but the Fed’s rationale was that it can take up to three years or more for policy actions to affect economic conditions. By raising rates early and gradually, the Fed hoped to avoid surging inflation in the future.

Fast forward to today, and the picture couldn’t look more different. Inflation exceeded the 2% target for 12 months before the Fed began to raise rates. Initially, the Fed believed inflation was “transitory” or short-lived. Now, inflation is a top financial concern and there is a risk that it has gathered enough momentum that it will be difficult to bring down.

Balancing Inflation and Recession Risks

The Fed expects to raise its target rate to around 4.4% by the end of 2022, up from the current range of 3-3.25%. However, they don’t foresee inflation reaching their 2% target until 2025.

In the meantime, the rapid interest rate hikes could lead to an economic downturn. Risks of a global recession have increased as other central banks raise their rates too. The World Bank offers policymakers a number of suggestions to help avoid a recession:

  • Central banks can communicate policy decisions clearly to secure inflation expectations and, hopefully, reduce how much they need to raise rates.
  • Governments can carefully withdraw fiscal support, develop medium-term spending and tax policies, and provide targeted help to vulnerable households.
  • Other economic policymakers can help relieve supply pressures through various measures. For instance, they can introduce policies to increase labor force participation, enhance global trade networks, and bring in measures to reduce energy consumption.

Will policymakers heed this advice and, if so, will it prove sufficient to avoid a global recession?

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When Will Air Travel Return to Pre-Pandemic Levels?

COVID-19 hit the air travel industry hard. But passenger traffic is slowly recovering, and by 2025, things are expected to return to ‘normal.’

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when will air travel return to pre-COVID levels?

When Will Air Travel Return to Pre-Pandemic Levels?

Many industries were hit hard by the global pandemic, but it can be argued that air travel suffered one of the most severe blows.

The aviation industry as a whole suffered an estimated $370 billion loss in global revenue because of COVID-19. And while air travel has been slowly recovering from the trough, flight passenger traffic has yet to fully bounce back.

Where is the industry at in 2022 compared to pre-COVID times, and when is air passenger travel expected to return to regular levels? This graphic by Julie R. Peasley uses data from IATA to show current and projected air passenger ridership.

Air Travel Traffic: 2021 and 2022

After an incredibly difficult 2020, the airline industry started to see significant improvements in travel frequency. But compared to pre-pandemic levels, there’s a lot of ground to cover.

In 2021, overall passenger numbers only reached 47% of 2019 levels. This influx was largely driven by domestic travel, with international passenger numbers only reaching 27% of pre-COVID levels.

Passenger numbers (% of 2019)20212022
International27%69%
Domestic61%93%
Africa46%76%
Asia Pacific40%68%
Caribbean44%72%
Central America72%96%
Europe40%86%
Middle East42%81%
North America56%94%
South America51%88%
Industry-wide47%83%

From a regional perspective, Central America experienced one of the fastest recoveries. In 2021, overall passenger numbers in the region had reached 72% of 2019 levels, and they are projected to reach 96% by the end of 2022.

In fact, the Americas as a whole has seen a quick recovery. Both North America and South America also reached above 50% of 2019 ridership in 2021, and are projected to reach 94% and 88% ridership in 2022, respectively.

On the opposite end of the spectrum, Asia Pacific has experienced the slowest recovery. This is likely due to stricter lockdowns and travel restrictions put into effect in this region (which was harder hit by SARS in 2003), especially in places like Shanghai.

Forecasting Traffic in 2023 and Beyond

While recovery has looked different from region to region, airlines are largely expected to see a full recovery to their ridership levels by 2025.

Forecasted Passengers (% of 2019)202320242025
International82%92%101%
Domestic103%111%118%
Africa85%93%101%
Asia Pacific84%97%109%
Caribbean82%92%101%
Central America102%109%115%
Europe96%105%111%
Middle East90%98%105%
North America102%107%112%
South America97%103%108%
Industry-wide94%103%111%

This recovery is a signifier of a much broader mindset shift, as governments continue to reassess their COVID-19 management strategies.

But while the future seems promising, IATA stressed that the forecast does not take into account the potential impact of the Russia-Ukraine conflict and other geopolitical concerns, which could have far-reaching consequences on the global economy (and travel) in the coming years.

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All of the World’s Money and Markets in One Visualization (2022)

From the wealth held to billionaires to all debt in the global financial system, we look at the vast universe of money and markets in 2022.

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All of the World’s Money and Markets in One Visualization

The era of easy money is now officially over.

For 15 years, policymakers have tried to stimulate the global economy through money creation, zero interest-rate policies, and more recently, aggressive COVID fiscal stimulus.

With capital at near-zero costs over this stretch, investors started to place more value on cash flows in the distant future. Assets inflated and balance sheets expanded, and money inevitably chased more speculative assets like NFTs, crypto, or unproven venture-backed startups.

But the free money party has since ended, after persistent inflation prompted the sudden reversal of many of these policies. And as Warren Buffett says, it’s only when the tide goes out do you get to see “who’s been swimming naked.”

Measuring Money and Markets in 2022

Every time we publish this visualization, our common unit of measurement is a two-dimensional box with a value of $100 billion.

Even though you need many of these to convey the assets on the balance sheet of the U.S. Federal Reserve, or the private wealth held by the world’s billionaires, it’s quite amazing to think what actually fits within this tiny building block of measurement:

What fits in a $100 billion box?

Our little unit of measurement is enough to pay for the construction of the Nord Stream 2 pipeline, while also buying every team in the NHL and digging FTX out of its financial hole several times over.

Here’s an overview of all the items we have listed in this year’s visualization:

Asset categoryValueSourceNotes
SBF (Peak Net Worth)$26 billionBloombergNow sits at <$1B
Pro Sports Teams$340 billionForbesMajor pro teams in North America
Cryptocurrency$760 billionCoinMarketCapPeaked at $2.8T in 2021
Ukraine GDP$130 billionWorld BankComparable to GDP of Mississippi
Russia GDP$1.8 trillionWorld BankThe world's 11th largest economy
Annual Military Spending$2.1 trillionSIPRI2021 data
Physical currency$8.0 trillionBIS2020 data
Gold$11.5 trillionWorld Gold CouncilThere are 205,238 tonnes of gold in existence
Billionaires$12.7 trillionForbesSum of fortunes of all 2,668 billionaires
Central Bank Assets$28.0 trillionTrading EconomicsFed, BoJ, Bank of China, and Eurozone only
S&P 500$36.0 trillionSlickchartsNov 20, 2022
China GDP$17.7 trillionWorld Bank
U.S. GDP$23.0 trillionWorld Bank
Narrow Money Supply$49.0 trillionTrading EconomicsIncludes US, China, Euro Area, Japan only
Broad Money Supply $82.7 trillionTrading EconomicsIncludes US, China, Euro Area, Japan only
Global Equities$95.9 trillionWFELatest available 2022 data
Global Debt$300.1 trillionIIFQ2 2022
Global Real Estate$326.5 trillionSavills2020 data
Global Private Wealth$463.6 trillionCredit Suisse2022 report
Derivatives (Market)$12.4 trillionBIS
Derivatives (Notional)$600 trillionBIS

Has the Dust Settled Yet?

Through previous editions of our All the World’s Money and Markets visualization, we’ve created snapshots of the world’s assets and markets at different points in time.

For example, in our 2017 edition of this visualization, Apple’s market capitalization was only $807 billion, and all crypto assets combined for $173 billion. The global debt total was at $215 trillion.

Asset2017 edition2022 editionChange (%)
Apple market cap$807 billion$2.3 trillion+185%
Crypto$173 billion$760 billion+339%
Fed Balance Sheet$4.5 trillion$8.7 trillion+93%
Stock Markets$73 trillion$95.9 trillion+31%
Global Debt$215 trillion$300 trillion+40%

And in just five years, Apple nearly quadrupled in size (it peaked at $3 trillion in January 2022), and crypto also expanded into a multi-trillion dollar market until it was brought back to Earth through the 2022 crash and subsequent FTX implosion.

Meanwhile, global debt continues to accumulate—growing by $85 trillion in the five-year period.

With interest rates expected to continue to rise, companies making cost cuts, and policymakers reining in spending and borrowing, today is another unique snapshot in time.

Now that the easy money era is over, where do things go from here?

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