Roaring 20s or Slowdown Ahead?
As the reopening of the US economy continues, Vaughan Nelson’s Chris Wallis looks at sustainability of economic and equity market growth.
- It’s understandable why a lot of investors consider the current environment similar to the Roaring ‘20s. There has been an incredibly strong rally; we are probably seeing the best economic growth numbers we may see in a lifetime. But we are reasonably far advanced from a reopening standpoint.
- Currently, over the short term, volatility has continued to fall across key sectors: small caps, tech, industrials, and energy. Cross-asset volatility has been very much supportive of equity fundamentals.
- That said, it’s clear we are going to have a peak in industrial growth later this year.
- We’ll probably start to see industrial's rate of improvement peak. Strong growth out of the services side of the economy should continue.
- Infrastructure is going to be a key part of real economic growth well into the future.
- Even if Congress passes this infrastructure bill later in the third or fourth quarter of 2021, those funds really won’t begin to hit the real economy until well into 2022.
This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary. The views and opinions expressed are as of April 26, 2021 and may change based on market and other conditions.
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