Monthly Investment Outlook - Our U.S. economic recovery outlook

Title graphic: Our U.S. economic recovery outlook

The U.S. economy has been on a roller coaster ride since the spring due to the pandemic. But, it’s finally gaining momentum again with news of the slowing rate of infections.

Housing’s usual early-cycle recovery is being supercharged by ultra-low mortgage rates and by the release of pent-up demand. This is having a ripple effect on purchases of appliances and home furnishings. And, combined with a strong demand in auto sales, is supporting increased consumer spending on “big-ticket” items. However, other frontline industries most exposed to the pandemic’s economic fallout, like travel and entertainment, have been slower to recover. Industries like these may not catch up until there’s a significant boost to consumer confidence from a vaccine against the coronavirus.

Remarkably, even a growth-sapping increase in the U.S. foreign-trade deficit has signaled more strength than weakness through solid gains in exports and an even healthier rise in imports tied to domestic spending.

Some economic uncertainties remain, such as the potential of a new surge in COVID-19 infections, but we nonetheless believe that economic momentum is strong enough to produce significant improvement by year-end 2021.