Stephen Zielinski

April – May 2021

The Economy:

The rise in GDP reflected an acceleration of the economic recovery and was sparked by a 10.7% surge in consumer expenditures, which is the largest component of the U.S. domestic economy. Similar trends are evident in Europe, just lagging the U.S. by several months.
The broad commodity price increase has been driven by an acceleration of global economic growth, improving consumer confidence, rising housing prices, and instances of supply constraints.

The Economy

The inflation debate is on! Fed Chair Powell noted the economic recovery was progressing well and that bouts of rising inflation in 2021 should be “transitory”.
Commodity prices have risen significantly including copper, iron ore, lumber, and wheat resulting in increased prices for food, durables, housing, and new construction.
The question is whether wages will increase and if companies will be able to pass along higher prices to consumers. The change in private-sector nominal average hourly earnings is well below the CPI inflation rate thus far in the recovery. This story has not yet played out.
Central banks remain accommodative by keeping interest rates near record lows, which has elevated investor risk-taking to seek higher rates, equity valuations, economic growth, corporate sales, consumer spending, and employment.

Economy

International Monetary Fund (IMF) revised its forecast for global economic growth this year to 6%, up from 5.5% in January. This rate would represent the fastest global economic growth since 1980.