- The Fed’s Beige Book is a collection of anecdotal evidence from businesses across the country. It found evidence of moderate growth in the face of widespread shortages of materials and labor.
- Earnings are still rebounding and the forecast is positive for 2022 as well.
- New COVID lockdowns are a concern.
Despite risks abounding, the economy still remains on solid ground and sentiment is positive. Does that make it too legit to quit? Let’s discuss in this month’s newsletter.
Growth persists despite shortages
The Fed’s Beige Book, released eight times a year, reflects information gathered by the Federal Reserve Bank in each of the districts in the country. The month recent piece indicated that economic growth has persisted, however it has been somewhat impeded by supply side disruptions and labor shortages.
May or may not live up to the bullish expectations
Overall the economy is still in good shape. Lawmakers expect inflation to subside in the medium term, but in the short term we should expect to see some upward price pressure. Earnings are intact, with analysts predicting a 70% increase from the same period last year, the largest in over a decade.
It is cautionary to note that analyst optimism can sometimes go too far. Valuations are already high as the market has advanced, putting pressure on companies to meet investors’ expectations.
We’re not out of the COVID woods yet
New COVID infections are still a concern, as the Delta variant infects unvaccinated members of the population. With cases on the rise across the country, lockdowns may be coming ‘round the mountain.
Tightening likely but not certain
The Fed has been buying government securities, infusing cash into the economy, for over a year. It is likely we’ll see the Fed tapering, or slowing the rate of bond purchases, at some point within the next 12 months. This is usually a harbinger of tighter monetary policy. However, such moves can never be predicted.
As always, please make an appointment if you wish to discuss your investments or financial plan.
-Judd
Sources
Guggenheim. 19 July, 2021. Weekly Viewpoint. Markets Break Three Week Winning Streak.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.