While Covid cases are picking up, and the Delta virus is changing the calculus around how efficacious vaccines are, the economy continues to slowly improve. Data shows that previous spikes in cases have resulted in less and less economic disruption as time wears on, a testament to the human ability to adjust. That said, problems could still crop up in specific areas, including travel and entertainment (including restaurants) industries, and if school closures become common again, we’ll see suppressed employment numbers.
More pertinent to the Fall/Winter economy in the US may be the fiscal and monetary support that we’ve enjoyed as a result of the pandemic. Many programs are ending, and some are experiencing court challenges. These impacts on top of higher inflation could put the skids on what has been a brisk recovery thus far. A glance at the bond market shows a heavy bet on a slowdown later this year, and we’re going to take that prognosis to heart. Our expectation is a tougher stock market will take hold for a few months, so fasten your seat belts.