As we head into the July 4th holiday, we are reminded of how exceptional this nation is in the world. After dealing with a global pandemic, the U.S. has led the world in supporting key pharmaceutical companies to create vaccines that have helped nearly end the pandemic. For much of the pandemic, the U.S. has led the way in the number of vaccinated people among developed nations. In the 7 months since the vaccines were made available, the U.S. has administered more than 319 million total doses of the vaccines. On top of that, despite bad policy decisions, the U.S. economy has emerged in much better shape than the vast majority of the world's economies. What a marvel of a nation!
The market continues to struggle with Fed accommodative policies coming to an end. The longer the Fed stays on the sideline with regard to inflation, the sooner inflation will begin to hamper economic growth. For the time being, since we are coming off record lows for inflation in 2020, the economy is experiencing re-inflation as consumers return to normal spending habits. However, if the Fed keeps interest rates low for too long, the baked-in inflationary numbers would be difficult to undo. Fed governors appear to be mixed on the timing for raising rates. For now, 2023 is the current target of the Fed for future rate hikes. According to Chairman Powell, "hyperinflation" is not a risk.
We are reaching levels in the economy and in the pandemic where incremental improvements will be more common. The year-over-year data will begin to normalize the further away we get from the Feb-April economic data and the further away we get from the Oct-Dec surge in COVID cases. Hotel Occupancy is nearly at 2019 levels. Restaurant Dining has reached pre-pandemic levels. TSA checkpoints in airports are steadily approaching 2019 levels, but still about 20% below pre-pandemic highs. Box office receipts still have a long way to go as some theatres are still not fully open in certain areas of the country.
Since we have emerged from the peak of COVID Cases & Deaths in early January, numbers of Cases, Deaths, and Hospitalizations have plummeted. However, we've reached levels where week-to-week numbers could move up or down incrementally as pandemic continues to slowly recede. Positive cases now do not mean equal the seriousness as when the pandemic began as doctors are more adept at handling cases and medical treatments have vastly improved since early 2020. Deaths & Hospitalizations are likely to continue slowly declining despite some pickups in Cases from time-to-time. As more people become vaccinated, (still averaging more than 700,000 vaccinations per day) the likelihood of the COVID virus surviving diminishes.
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