Macro Overview February 2021

Kent Forsey, CFP® COVID-19, Economic Update, Investing, Macro Overview, Stimulus, Stocks, Tax Returns, Vaccination

As we settle into the new year, we find the market influenced by an unexpected source, progress in vaccination distribution and new information on stimulus checks. Read on for additional information into these areas and more.

Speculative trading among smaller retail investors raised concerns about how social media is influencing individual stock valuations. Recently popularized social news aggregation and discussion websites are driving frenzied trading behavior among inexperienced young traders while disrupting traditional stock valuation methods. Many are calling for heightened regulation ad scrutiny surrounding these websites and how they operate. Our firm continues to advocate for investing with long term goals in mind and is happy to discuss any financial positions with you.

Vaccination progress is being closely monitored by market analysts and economists because of the tremendous impact it has had on consumer sentiment. Consumer expenditures have been hindered by stay-at-home mandates and fear of infections in public locations such as retail stores and restaurants.

The pandemic has accelerated the global wealth gap between the wealthy and the poor. The Rockefeller Foundation, a private foundation, tracked roughly 2,200 billionaires worldwide that saw their net worth grow by $2 trillion in 2020, while 435 million low-income families globally lost jobs, homes and asset values.

The IRS has just begun accepting 2020 tax returns as of February 12, 2021 due to staffing shortages and COVID related rules that were enacted in December 2020. Acceptance of prior year returns traditionally would have started two weeks sooner. As a result, many taxpayers may have to wait an extra month or two before receiving tax refunds due. The April 15th filing deadline remains the same. Individuals who did not get stimulus payments from the government may be able to claim those funds through their 2020 tax returns. The IRS suggests that individual file electronically to receive refunds payable more quickly.

Economic growth for the U.S., as measured by Gross Domestic Product (GDP_, rose at a 4% rate in 2020, following a contraction of over 31% in the second quarter alone. The dramatic collapse and ensuing rebound for economic growth was of historical proportion.

Since COVID vaccine distributions began on December 14, 2020, more than 29.5 million doses have been administered in the U.S. as of January 30, 2021. Total doses distributed but not yet administered are nearly 50 million as of the end of January. The federal government has delegated prioritizing and distribution of the doses to the individual states. Health care experts are concerned that the sluggish pace of vaccinations worldwide will postpone any economic resurgence.

Data gathered by the U.S. Census Bureau as of January 22, 2021, reveal that millions of Americans are saving or paying off debt with their stimulus checks, rather than spending them. With over 37.5 million people opting to save their stimulus payments, some believe that millions receiving stimulus checks may not actually need them.

Sources:  Census Bureau, Rockefeller Foundation, CDC, Federal Reserve, IRS, ©OneBlueWindow, LLC