Our advisors utilize their experience and expertise and that of their colleagues to develop the best solutions for your complex personal and professional financial situations.
Actionable planning strategies to inform and guide your decision-making.
February 1, 2021
Weakened U.S. consumer spending has carried over into the early part of 2021 as certain states and regions experienced renewed lockdowns and mobility restrictions. The prospect of broad vaccine distribution by the end of the quarter should unleash pent up demand. Meanwhile, the fully-recovered housing and capital spending sectors appear unaffected by the virus’ second wave. As the consumer recovery develops throughout the year, expect a pickup in inflation, particularly with energy prices. These increases will be more cyclical as opposed to the beginning of a longer-term inflationary cycle. Ample labor slack (potential supply of workers), healthy industrial production, and intense global competition should prevent inflation from hiking alarmingly higher.
Overseas, the virus-ravaged European economy saw fourth-quarter GDP decline. This drop will inevitably continue in the first quarter. Arguably, this region may benefit the most from a vaccine given its dependence on the travel and tourism sectors. Japan’s proximity to the rebounding Chinese markets continues to help drive growth and prevent a second recession. China is on target to produce approximately 8.0% GDP growth in 2021. Currently, its biggest economic risk appears to be overproduction. Although, any delays with vaccine distribution could dampen consumer re-engagement.
The virus’ anticipated second wave is slowing the global economy, but there are many reasons to be optimistic. The expected broad distribution of the vaccine by the end of the first quarter and ample fiscal relief mean any pullback or correction in the equity markets should be viewed opportunistically. Additionally, inflation concerns should be more cyclical than secular, and central banks should remain supportive and prevent a dramatic rise in rates across the maturity spectrum.
For more insights, contact a Cerity Partners advisor or visit the thought leadership section of ceritypartners.com.
Please read important disclosures here.
Partner & Chief Investment Officer
The U.S. economy is slowing yet expanding, with inflation rates decreasing and housing recession stabilizing. Lower energy prices and China’s growth help delay a European…
While there were concerns about an impending recession, both the U.S. and European economies showed resilience with growth rates exceeding expectations. Strong job security and…
Ben Pace, Christian Thwaites and James Lebenthal
The global economy continues to avoid a near-term recession, as consumer spending remains strong and the effects of monetary tightening have yet to be fully…
Markets have recently been and will continue to be driven by three key influences: monetary policy primarily emanating from the Federal Reserve, China’s COVID reopening…
Ben Pace, Tom Cohn and James Lebenthal
Despite the persistency of inflation and the magnitude of rate increases in 2022, the economy has generally remained resilient, buoyed by the inherent strength of…
Curious about learning more? Let’s talk.
Tell us about yourself and your current financial situation without cost or obligation. Receive an introduction to a wealth management colleague, have a personal conversation, and get your questions answered.