​Economic Outlook

2021 Third Quarter

Deflating Demand

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America's bifurcated economy faces a long-dormant specter, inflation. The challenge for investors is determining whether this nefarious outcome is a temporary or permanent feature of the post-Pandemic landscape. The answer lies in assessing its root cause. The Pandemic’s onset brought a health policy-induced retrenchment of service demand. With the consumption of services off the table, consumers transferred spending to goods. The fiscal response amplified this decision by increasing incomes broadly. The reality of just-in-time supply chains was that they depend upon stable demand. The resultant supply bottlenecks delivered inflation. Adaption will occur in time and provide higher supply while incomes lower with fading stimulus payments. As business adapts, this too will pass.

 

 

 

A gain of nearly six percent is expected for 2021. This gain will be the largest in twenty years. The seven trillion dollar debt expansion over the last three years will impair future growth. Targeted fiscal policy should continue to help those in need. The critical concern is managing the removal of monetary and fiscal policy to avoid deflating housing and inflation.

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US Economic Dashboard

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