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.
May 4, 2021
Steadily increasing vaccination rates and the receipt of two fiscal stimulus checks are driving an explosion in US consumer spending which has caused an involuntary depletion in inventories. The rebuild of these inventories and the continued release of pent-up demand as mobility constraints are steadily reduced should lead to another quarter of strong economic growth, perhaps even better than the 6.4% recorded in Q1. With the US economy performing better than most others around the world, the trade deficit should grow and serve as the only real near-term headwind to economic expansion.
At the same time, a somewhat disorganized vaccine rollout and heavy reliance on services industries have prevented continental European countries from more fully emerging from lockdowns and mobility restrictions. This has caused a so-called double dip recession in the Eurozone although they will likely emerge from this state on the back of improved vaccine distribution and the impact of growing global economic strength on their export industries. Having been the first country to fully emerge from pandemic driven restrictions, China has fully recovered lost output and the government now is attempting to control economic growth to prevent budding price inflation and asset price bubbles. The outlook for Japan with their strong export sector is tied rather closely to economic growth in China and the US. While this should be supportive of the economic recovery, their well-known demographic challenges and restrained consumption growth will slow the rate of economic improvement.
The continued inability of some countries to acquire and effectively distribute vaccines is notably constraining the recoveries in some emerging market economies. India and Brazil are being particularly hard hit by the second virus wave with hospital capacity being severely challenged. Lockdowns and mobility restrictions are being reimposed and these economies should again contract. Based upon the experiences of most other countries, the hope is this only delays expected recoveries into the second half of the year.
The global economy is likely on the verge of complete recovery by the end of the year. Monetary policymakers will remain hesitant to tighten until they are confident the various recoveries are more sustainable and broader based. This should continue to be a favorable environment for equities and other risky assets such as high yield bonds. The ominous impact of corporate and individual tax increases should not become a serious issue for investors until we are closer to the end of the year.
For more market insights, contact a Cerity Partners advisor or visit the thought leadership section of ceritypartners.com.
Cerity Partners LLC (“Cerity Partners”) is an SEC-registered investment adviser with offices in California, Colorado, Illinois, Ohio, Massachusetts, Michigan, New York and Texas. Registration of an Investment Adviser does not imply any level of skill or training. This commentary is limited to general information about Cerity Partners’ services and its financial market outlook, which may not be suitable for everyone. The information contained herein should not be construed as personalized investment, tax, or legal advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this commentary will come to pass. Investing in the financial markets involves risk, including the risk of loss of the principal amount invested; and may not be appropriate for everyone. The information presented is subject to change without notice and should not be considered as an offer to sell or a solicitation of an offer to buy any security. All information is deemed reliable but is not guaranteed. For information pertaining to the registration status of Cerity Partners, please contact us or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). For additional information about Cerity Partners, including fees and services, send for our disclosure statement as set forth on Form CRS and ADV Part 2A using the contact information herein. Please read the disclosure statement carefully before you invest or send money.
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.