Things certainly were bad, and are improving. But there is more ground to cover in that recovery, said an industry expert at a session of the NTSA Winter Virtual Summit.
In “2021 Outlook: The Recovery Takes Hold,” a Feb. 23 session, Brian Levitt, a Global Market Strategist, Invesco, discussed the recovery from the sudden, sharp downturns resulting from the pandemic’s quick onset and spread.
Rounding the Corner
The outcome was far worse than during the global financial crisis, said Levitt, and this particular crisis is of economic origin.
While the economy is recovering, Levitt said “things are still not great” and that he expects “this to be a pretty long, drawn-out process.” And the recovery is not universal, nor even, Levitt indicated. He said that an “output gap” remains, and that “quite a bit” of the economy is recovering, “but not everything.”
Still, he noted, the U.S. economy is improving. Quickly, in fact. “The market today seems to be wondering if we’re going too far, too fast,” Levitt said. He struck an added note of optimism regarding vaccinations. By now, he said, the number of Americans who are vaccinated exceeds the number of documented cases of COVID-19, and the vaccination rate is outpacing the number of new cases. “We’re in a far better place than we were,” he said.
Now What?
What will the policy response be to the economic recovery?
Investors are worried that the Federal Reserve will raise rates during the recovery as it did in 2015 and 2018, said Levitt. He added that he expects additional fiscal support to be extended to states and localities. That, he said, would take the form of fiscal replacement of revenue rather than stimulus to spark economic activity.
Levitt struck an optimistic tone, stressing the importance of “staying the course” and sticking with investment plans. He added that it “doesn’t feel like it’s overheating” and that there is “lots of help coming.” And, he reminded attendees, “We’re not the first generation to face challenges.”
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