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November 2, 2020
The U.S. and many world economies showed a rather dramatic rebound in the third quarter from the depths of the pandemic-induced recession. That said, U.S. GDP is still down for the year and will be down for the full year, even if optimistic forecasts for 5% fourth-quarter growth come to fruition. The pathway and timing for a complete recovery to pre-pandemic levels depend on the extent to which the second wave of the virus strains hospital capacity and leads to the reimplementation of social mobility restrictions. Adding to the uncertainty is the willingness of consumers to re-engage in specific sectors of the economy, like travel and tourism.
Negotiations for another fiscal stimulus package are at a standstill, bogged down by the sharp political disagreement over the size and scope of the relief. There is a hope that after the election, Congress and the White House can come together to provide aid to struggling businesses and their employees.
Overseas, many European countries have reinstated lockdowns. However, government officials are quick to point out that the restrictions are not as broad as those imposed earlier in the year. China and other Asian countries have had more success in keeping infection rates low, leading to a more persistent economic recovery. Japan, in particular, is benefiting from the rebound in China and the other global economies.
Without an effective vaccine adopted by a large portion of the population, the pandemic will continue to loom large over the heads of the global economy and the equity markets. Continued monetary ease, but most importantly fiscal relief, will be needed to prevent broad economic stagnation or a descent into a second recession.
For more market insights, contact a Cerity Partners advisor or visit the thought leadership section of ceritypartners.com.
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Ben Pace, James Lebenthal and Christian Thwaites
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