While the reopening of the global economy and vast industries has been underway and seen significant amounts of progress, the associated economic confidence is waning as new pressures and data forecast that market volatility and uncertainty might win out in the coming months. And while we have managed to recover from the pandemic-induced recession and gave way to more movement and revival of many business sectors, it now appears that we are still far from fully overcoming the impacts left prior.
Although, some would argue that we are still in a transitional state, and so as long as we keep up our current pace, everything else will follow soon after in domino effect, most especially when supply chains are relieved of external pressures. However, we can’t deny that the rate at which economic progress and revival have been moving fails to meet the expectations of earlier this summer, and it only worsens the economic outlook for the rest of Q3 and Q4 of 2021.
Economic Recovery Is Starting To Plateau
To put things into context, it is justifiable that nobody expected the speed at which we were able to experience economic recovery over the past few months; but, it now seems that this sharp bullish movement is beginning to plateau and will need even greater economic stimulation to support any more push upward. And suppose it turns out to be true that the economic recovery has reached its all-time peak. In that case, the remaining business areas and livelihoods that have yet to regain their composure fully will undoubtedly be subject to more extended downtime.
A Positive Labor Market Contrasted With Surging Inflation
On the one hand, the Non-Farm Employment Change last 6th of August revealed an extreme positive for the US economy that 943,000 jobs were added, with the unemployment rate gradually decreasing. However, despite the massive recovery of the labor market, surging inflation prices have run awry and are driving prices throughout the country even higher. And despite the benefits of more livelihoods being added into the economy, if consumer prices rise at a steady and faster rate, it would still put most households at a deficit.
Housing Bubble Fears Versus Easing Housing Market Data
For the better half of 2021, the housing industry has been nothing short of a seller’s market as prices have gone through the ceiling and with multiple bids on every listing. Luckily enough, now that housing inventory is returning with more construction projects and excavation services to fuel housing development, many hope prices will ease in proportion. However, considering how severely priced out homebuyers have become in the current real estate market, it has lead many to believe that the resolution has been late because housing bubble fears now overshadow any positive remarks.
Threat Of New Covid-19 Variants
Lastly, we can’t forget that we are still in the middle of the Covid-19 global pandemic, and we are currently facing a new threat of different variants spreading and infecting people at a much faster rate. For example, both the Delta and Lamda variants have already spread throughout the country in different states, which imposes the risk of stricter health protocols and regulations running amok and slowing down progress. What’s worse, if strains mutate and become more resistant to currently available vaccines, this could push us back to square one.
The Remainder Of August Will Provide Key Details
As a result, much of what the future has in store for us rely on the upcoming economic data to be released later this week and for the rest of August, which will help paint a complete picture of what to expect. And if pessimists were to be proven wrong, then we’d have nothing to worry about for the rest of 2021; however, if the complete opposite turns out to be true, then we will most definitely need a change of approach to investments, capital protection, and the foreseeable business operations.
Core Retail Sales Report
Core Retail Sales is forecasted to dip down from the previous month’s 1.3% increase to a meager 0.2%, and if it manages to hit this mark or better than expected, then this will mean that consumer activity remains sustainable amidst current inflation rates. But, if the report revealed a decrease worse than expected for core retail sales, then we should buckle down for further economic volatility hurting the dollar and the stock markets.
Fed Chair Jerome Powell will be speaking this week, and an FOMC meeting minutes will also be held, and both of these events taking place will provide us with the Federal Reserves’ forecast and economic outlook. And if they assume a more hawkish approach than expected, then we might just be able to sustain current bullish trends for a bit longer. Likewise, if the news that says otherwise comes to fruition, then this will deal a devastating blow for the economy moving forward.
Plan Ahead And Protect Your Investments
In conclusion, there’s no simple and straightforward method of ascertaining which way the U.S economy will sway in the months to come, but if current circumstances are to be accounted for, including cryptocurrency’s surge in the past few days, then volatility is imminent. So, play it safe and play ahead because protecting your investments should be your top priority before any sign of things going downhill shows itself.