For months many have wondered if inflation will start to become a problem. And while the United States has yet to see inflation become a real problem yet, over in Europe, inflation has become a real issue. In March, the Eurozone saw its highest inflation since the start of the pandemic. Consumer prices across the region rose 1.3% over the month, up from 0.9% a month before.
Still, the current inflation rate is still below the Eurozone inflation target of 2%, which isn’t concerning to European Central Bank President Christine Lagarde. “We know that in the short-term inflation is going to rise, there are some technical temporary factors that are going to lead to upward price pressures,” said Lagarde. “But we are going to see through that because these are not underlying fundamental factors that will increase prices in a consistent and convergent fashion.”
Global growth looks promising, but what about equality?
The International Monetary Fund sees enough positivity in the global economic forecast that it’s expected to raise its economic outlook projections for this year and 2022. The IMF cited a quick turnaround and rollout of coronavirus vaccines, along with stimulus packages that have helped countries to weather the storm during this tough period.
The only question now is whether or not this recovery will extend out from countries like the United States and China to the developing and underdeveloped world. There is a fear that major global powers will see economic recovery much more quickly than their counterparts, leaving an even wider economic gap in the global landscape. “While the outlook has improved overall, prospects are diverging dangerously not only within nations but also across countries and regions,” says IMF Managing Director Kristalina Georgieva.
Unemployment remains consistent, consumer spending falls
The most recent figures for US unemployment were neither encouraging nor discouraging. The unemployment rate came in at 6.2%, slightly lower than the 6.3% rate in January. This is well below the close of 15% unemployment rate seen in April 2020 at the end of the pandemic. Some are concerned that the reported level of unemployment does not take into account the swaths of people who have simply exited the labor force after more than a year of job cuts as a result of the coronavirus pandemic.
Meanwhile, consumer spending fell in February by 1.0%, the most amount in 10-months. Even though this seems like negative news, it appears that the poor weather over the month caused much of the spending decline. Analysts expect that with the weather turning into Spring, and COVID vaccinations rolling out steadily, consumers spending will come back with a vengeance.
Problems at the Suez Canal
Toward the end of March, a cargo ship found itself stuck in the Suez Canal. For five days, the ship — the Ever Given — could not be moved and blocked the entire waterway. Ultimately the ship was able to be moved, but not without causing massive economic upheaval in the region. Unfortunately, the alternative route for ships trying to avoid the canal increases the shipping time from the Netherlands to Taiwan by almost 10-days.
It’s estimated that the incident cost $10 billion per day in global trade as cargo ships were delayed and goods were unable to reach their destination ports. More than 300 ships were delayed, threatening the oil supply in Lebanon and Syria. Numerous industries, from toilet paper to livestock to coffee, were negatively affected.
Biden proposes a new infrastructure plan
President Joe Biden put a new $2 trillion package on the table to boost the country’s aging infrastructure. Much of his plan is also geared toward introducing more energy-efficient and green building practices into public infrastructure at a time when the globe is working toward reducing carbon emissions over the coming decades. Biden has set a goal for the country to hit net-zero electricity emissions by 2035.
The major points of the plan include:
• Transportation – $621 billion to rebuild bridges, roads, ports, airports, and electric vehicle charging stations
• Elderly and disabled care – $400 billion to those who are caring for the elderly and disabled
• Drinking water and electricity – $300 billion for improving infrastructure for clean drinking water and updating the electric grid
• Affordable housing – $300 billion for building more affordable housing and upgrading schools
• Manufacturing – $580 billion for American-based manufacturing, research and development, and job training
Articles We’re Reading
U.S. adds 517,000 private-sector jobs in March, ADP says, as economy speeds up… (link)
Canada Looks to Immigration to Boost Economic Recovery… (link)
Apple pushes 100-plus manufacturing partners into renewable energy… (link)
Market Snapshot
For the Month Ending 3/31/2021 (Cumulative Returns)1
Did You Know?
United States trade
In an increasingly global world, the U.S. has played its role in international trade. The country still runs a trade deficit, exporting a total of $3.1 trillion and importing $2.5 trillion worth of goods each year. The largest category of both imports and exports are capital goods, which include machinery, vehicles, and equipment. Consumer goods are the second biggest import at $654 billion, while industrial goods are the country’s second largest export at $531 billion.
. …(link)
Presented by the Investment Committee of Lake Street, an SEC Registered Investment Adviser
The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Diversification does not ensure a profit or guarantee against a loss. There is no assurance that any investment strategy will be successful. Investing involves risk and you may incur a profit or a loss.
