As the U.S. endeavors to navigate out of the pandemic and into a recovery, questions remain about key factors, including COVID-19’s temporary and permanent effects on employment, the hope of achieving herd immunity, the unleashing of pent-up demand for goods and services as vaccinations rise, and the possibility of accelerating inflation. Investors have revised their expectations for economic growth in 2021-22 upward.
Yet the global pandemic remains persistent, and recent developments on that front have been mixed. As U.S. vaccinations escalated, the rise of highly contagious variants and limited vaccine access around the world contribute to unpredictability that makes for a challenging long-term outlook. Scientists have proven their ability to respond with medical advances—but with a time lag.
Major developments in economic and monetary policy could also affect market sentiment. The biggest factors that could impact the expansion include federal spending, the pace of economic growth, trending inflation and interest rates, and monetary policy responses to a possible overheating economy.Read More