2021 was a “boom” year in dentistry, as patients spent their government provided pandemic cash to take care of pent up demand for dental services. As a result, every segment of dentistry reported higher profit percentages.

In contrast, 2022 was a turbulent year for the economy, meaning dental practice performance returned to more normal levels. Inflation raged at a 40-year high, peaking at 9.1% in June, and ending the year at 6.5%, well above historical averages. After sitting on the sidelines for much too long, the Federal Reserve abruptly changed course and aggressively raised interest rates seven times during the year, for a staggering total increase of 4.00 percentage points (The Federal Reserve’s rate went from 0.25% to 4.25%).

These factors resulted in a stock market rout, with every index registering a decline. The S&P 500 index dropped 20% (before dividends) for the year, recording its seventh worst year since 1929. These factors combined to produce a dramatic decline in consumer confidence, which dropped to a record low in June of 2022. This caused consumers (patients) to tighten their purse strings and look for ways to reduce spending.

As pandemic payments and related tax benefits ended, patients had less disposable income to spend. Consumers began burning through their