Last week, the Federal Reserve reaffirmed that it would remain accommodative with monetary policy as the economy recovers from the pandemic despite inflationary pressures in the short term. The next few months should see an impressive rebound in the economy as the three-pronged catalyst of accommodative monetary policy, fiscal stimulus and the rising vaccination rate push growth up substantially.
This week, the April jobs report will likely show one million jobs added last month and the unemployment rate falling to 5.7%. Significant room for more job growth exists in the coming months. It will likely coincide with the reduction in Federal assistance programs to support the parts of the economy most impacted by the pandemic. Over the next few months, the big wildcard will be the uncertainty that rising inflationary pressures could put on the recovery. Given the rise in commodity prices and the shortage of essential items like semiconductor chips, the potential for price increases could appear in the next few quarters. Without a pickup in inflation, the markets should perform well.
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