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December 1, 2020
The second wave of COVID-19 has hit some countries harder than others, leading to renewed lockdowns and mobility restrictions. Here in the U.S., the constraints have been targeted and regional in nature. This approach should lessen the impact on fourth-quarter GDP, only slowing what is likely to be a comfortably positive-growth quarter.
On the flip side, European economies have generally chosen to reintroduce national lockdowns. As a result, GDP growth for the continent will probably be negative for both this quarter and the first quarter of 2021 in what could be described as a “double-dip” recession.
Asian economies, particularly China, have largely fought off the magnitude of the second wave, which should allow for an unabated recovery and economic expansion into 2021. Depending on their export dependence, some countries could see a slowdown in demand from trading partners most affected by the closures and mobility restrictions.
As we finish an extremely challenging year and look forward to 2021, the virus pandemic continues to overhang markets. Even so, there’s a growing light at the end of this dark tunnel with one or more vaccines expected for distribution by the end of the first quarter. Equity prices may already reflect much of the economic benefit from the impending return to normalcy. Additionally, the low interest rate environment could cause income-starved investors to stretch further for yield and assume greater risk. The higher price levels for risk assets leave little room for disappointment.
For more insights, contact a Cerity Partners advisor or visit the thought leadership section of ceritypartners.com.
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