The economic dam is bursting and the economy is booming. Demand in the US was described as “very, very strong” and “phenomenal” thanks to strong consumer balance sheets and vaccinations. Supply chains are still disrupted and there are significant inflation pressures.
Succinct Summary: The US got a new President last week, and the new administration is pledging more stimulus. The economy continues to chug along though and there are signs of tight capacity in some segments, especially transportation networks. Could additional stimulus lead to higher-than-expected inflation?
The Year in Review: 2020 was an unprecedented year and The Transcript covered the economy throughout all of its twists and turns. Even though China was battling Covid in 2019, no one really knew what was in store for all of us in 2020. Technology, capital markets, and housing were three industries that boomed. While the stimulus was integral, the economic hero of 2020 was the US consumer. Optimism is high that 2021 will be a more normal year.
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Succinct Summary: The economy continues its two speed recovery, but there are some signs that growth may be slowing. Even companies that benefitted from the pandemic, like Netflix, are seeing the after-effect of demand that was pulled forward to earlier in the year. Elections will be a key source of uncertainty in the coming weeks. And COVID infections are stubbornly high. But consumers are going crazy at home.
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Succinct Summary: The economy was rebounding in May and June, but the recovery seems to have stalled out as infections have rebounded. CEO commentary was particularly negative last week. Business leaders are rapidly losing confidence and do not see a V-shaped recovery materializing. There’s a sense that government stimulus appears to be the only thing propping up the economy and it’s creating distortions in unemployment and financial markets. Still (perhaps because of this stimulus) the hot housing market suggests that consumers may not actually be in such bad shape after all–just spending on different things.
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Succinct Summary: The decline in economic activity has been huge and the recovery may take longer than expected. However, bulls are betting on massive stimulus in an environment that was already highly liquid prior to the Covid crisis. Consumers are itching to get back to normal and some hard hit industries are seeing stabilizing trends. But the economy is subject to the machinations of non-economic forces: governments and a poorly understood disease.
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Succinct Summary: It’s hard not to be happy about the economy. The consumer is strong and business sentiment has turned positive. Recession fears have abated thanks to the actions of central banks and a trade truce with China. Markets are feeling optimistic.
Succinct Summary: The consumer is strong but manufacturing is weak. Everyone is tired of Brexit and tech IPOs probably still have a path to market as long as they have a path to profitability.