On Air with Altair: 3Q 2021 Market Review Video
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- Both the global and U.S. economies lost momentum this summer and fall as the Delta strain surged.
- Some meaningful risks to continued growth remain, including the persistence of elevated inflation and central banks’ impending reduction of emergency stimulus.
- Overall, however, the U.S. economy has weathered the challenges and, most importantly,
- corporations, manufacturers, consumers and households all are in solid shape heading into next year.
- The course of the pandemic remains the key determining factor for the foreseeable future.
- We expect to see renewed growth acceleration in 2022 following this recent Delta-induced slowdown.
SUPPLY SNAGS AND INFLATION
- Supply-chain disruptions continue to push prices higher and pose an obstacle for the recovery.
- These bottlenecks are on display every day in clogged ports around the world.
- Until the gridlock ends, we can expect consumer prices to remain elevated.
- Stranded ships are hardly the only issue, of course.
- Energy prices have increased sharply for mostly unrelated reasons, wage growth is on the rise and rent costs are climbing.
- But it is supply shortages that are at the core of higher inflation.
- We anticipate this period of persistently higher prices to subside next year once supply-chain problems abate.
- We do not expect inflation to force the Federal Reserve’s hand in raising interest rates sooner than is currently telegraphed – before late 2022 at the earliest. The Fed remains supportive of the economy and markets.
JOB MARKET STILL RECOVERING
- The pandemic has changed the face of the U.S. labor market, and the jobs recovery is still evolving.
- Five million positions are still missing compared with the pre-pandemic peak.
- We still expect the number of workers returning to the labor force to accelerate.
- People are staying out the work force for a variety of reasons: Covid-related, early retirements, child-care concerns, lifestyle choices, and rising home values and stock prices that have enabled changes.
- Slow pace or not, this labor market is recovering — against the backdrop of a healthy economy. The fact it has lost momentum in recent months is not cause for major concern.
- Given the current risks, we certainly could see heightened market volatility in the months ahead.
- But we retain a positive outlook based on the economy’s sound fundamentals, the strength of the U.S. consumer, and recent evidence that Delta’s devastating impact is beginning to weaken.
You can find our full commentary here. Thank you for watching.
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