Third Quarter 2021 Review

The U.S. economy is humming again, with nearly all 50 states lifting pandemic-related restrictions. The consumer is out in full force, armed with accumulated savings. Spending volume on consumer goods is over 10% higher than pre-pandemic levels, and early data suggests consumers are now shifting their dollars to services.

Strong spending, accelerating demand, and tight inventories are likely to keep inflation as a headline risk, and continued strength in the jobs market and wage pressures may motivate the Federal Reserve to shift into monetary tightening mode sooner than later—at first by tapering bond purchases, and eventually by raising interest rates.

In our view, market volatility could increase as the initial burst of growth wears off a bit, but at the end of the day, growth is growth—and we should see a lot of it in the second half of the year.