Midyear Outlook 2021 - While the speed can be exhilarating as economic growth accelerates, it can also be dangerous. The highlights in the report linked below include:
Economy: Speeding Up. The country has reopened and there is still plenty of momentum to extend above-average growth into 2022. LPL researchers forecast 6.25 to 6.75% U.S. gross domestic product (GDP) growth in 2021, which would be the best year in decades.
Policy: Taking a Backseat. The economy was supported through the pandemic by more than $5 trillion in stimulus measures and extraordinary support by the Federal Reserve. Policy will take a back seat in 2021 as private sector growth replaces stimulus checks.
Stocks: Gaining Ground. Economic improvement should continue to support S&P 500 Index earnings, which had a stunning first quarter. While valuations remain somewhat elevated, LPL Research thinks they look reasonable after considering still low interest rates and earnings growth potential.
Bonds: Safety Features. Inflationary pressure and economic improvement may put additional upward pressure on the 10-year U.S. Treasury yield. LPL Research anticipates the 10-year yield finishing 2021 in the range of 1.75 to 2%.
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