Market Outlook

Q3, 2021: Taking Stock

Growth, Inflation & Policy

Growth Slowing

  • Growth expectations for FY21 have increased since the start of the year, but stabilized in recent months, now at 6% (Bloomberg, IMF), helped by stimulus, vaccine rollout, and base effects, but inhibited by concerns of another COVID wave.
  • Increased reliance on government spending and generally negative fiscal multipliers, especially in highly-indebted countries, means that longer-term real (inflation-adjusted) growth will be constrained.

Labor Market Has Made Progress But More Is Needed

  • From here, it will take nearly two years to achieve the Federal Reserve’s goal of full employment, assuming a pace of 350,000 additions per month. Even with the high number of available positions, filling these jobs will likely take time, as the reopening progresses further, workers relocate and are retrained, and pandemic assistance programs are discontinued.

Accommodative Policies

  • The number of Americans who favor additional stimulus appears to have increased over the past year. In a recent poll by Morning Consult and Politico, 91% of respondents favored additional stimulus to help the economy “recover from the coronavirus pandemic.” This is an increase from 74% in October 2020.
  • With the green light to spend, the Fed plays an important role in this political situation because it will need to monetize a significant portion of government spending—something it has so far appeared willing to do to sustain the pandemic recovery.


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This material is provided to advisors by Mount Yale Investment Advisors, LLC and contains market commentary from third-party sources it believes to be reliable. However, Mount Yale has not independently verified or otherwise investigated such information and makes no guarantee as to its accuracy or completeness.  In the event any of the assumptions used herein prove not to be true, results may vary substantially. All investments entail risks. Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.  Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor.  It is not intended to be a client-specific suitability or best interest analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities.

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