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First Quarter 2021 Executive Summary

Quarterly Executive Summary

“No matter how long the winter, spring is sure to follow.”  -- English Proverb

One year ago, our world was entering lockdown, as we held our collective breath pondering the gravity of the pandemic and its ensuing economic fallout.  The situation was unprecedented, and the ultimate impact was anyone’s guess. Having just experienced Q1 2020’s historic stock market crash (the DJIA lost 37% of its value between February 12 and March 23, 2020) and facing estimated corona-driven unemployment of a whopping 32% (higher than during the Great Depression), questions were plentiful and answers scarce.  We were confident that … in time … we would see a return to normal.  But when?  

We began to breathe a collective sigh of relief as the U.S. entered 2021 with the rollout of a COVID-19 vaccination program, a new $900 billion coronavirus relief package and stocks enjoying record highs.   No, we weren’t out of the woods, but it was fair to expect a brighter 2021.

And indeed, the year is off to a strong start.   Buoyed by yet another fiscal stimulus package, continued monetary policy support, improvements to vaccine supply and distribution, and ample corporate and consumer cash, we anticipate continued growth in the coming months.

After a rocky January, stocks climbed in the first quarter, as consumer confidence hit its highest level since the pandemic started.  The most significant test for U.S. stocks in the short run (currently a deal when compared to low Treasury yields, yet expensive in absolute terms) could be interest rates.  However, the Fed has made it clear that they do not intend to raise rates anytime soon.   But, again, it’s steady as she goes.  If the pandemic has taught investors anything, it’s to develop a plan and stick to it.  (If that sounds familiar, it should!)  Investors who pulled out of the market when stocks took a nosedive last March (and many did) have really been hurt.  Since then, both the DJIA and S&P 500 have soared more than 50%.  

As COVID restrictions continue to be lifted, the $1.9 trillion American Rescue Plan of 2021 (yes, TRILLION – which amounts to about 9% of the U.S. GDP) is set to supercharge the economic recovery.  Add in the December 2020 $900 billion stimulus and President Biden’s promise of $2 trillion in infrastructure spending, there’s a lot of cash to be deployed.   

We look forward to the remainder of the year and are optimistic (as are the bulk of global business leaders) for continued economic recovery.   So, as we bid farewell to the figurative COVID winter, we wish you health, prosperity, and happiness in the ensuing COVID spring.

Recent Economic Data: 

Gross Domestic Product (GDP).  The GDPNow model’s latest estimate (April 7, 2021) for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2021 is 6.2%., an increase from 4.3% in Q4 2020.  Remember Q2 2020 when the GDP shrank at an annual rate of 32.9% as restaurants and retailers closed their doors? What a difference a year (almost) makes.  

Unemployment.  The unemployment rate decreased to 6.0% in March, down considerably from April 2020’s historic high of 14.7%, but still 2.5% higher than February 2020’s pre-pandemic level.

Consumer Confidence.  The Conference Board Consumer Confidence Index, an indication of consumer attitudes and buying intentions, surged in March to its highest reading in a year.  It stands at 109.7, up from 88.6 in December 2020 (1985=100).  Despite recent gains, the index remains below the pre-pandemic rate of 132.6 posted in February 2020. 

Consumer Price Index (CPI).  The CPI for All Urban Consumers (CPI-U), a measure of inflation which shows “cost of living” fluctuations, rose 0.4% in February, on a seasonally adjusted basis, after rising 0.3% in January.  For 12 months ending February, the CPI-U increased 1.7% before seasonal adjustments.  

Earnings.  For Q1 2021, the estimated earnings growth rate for the S&P is 23.8%, which would mark the highest year-over-year earnings growth rate reported by the index since Q3 2018.  

Housing.  U.S. homebuilding dropped to a six-month low as severe cold gripped much of the country, with privately-owned housing starts down 10.3% in February.  We believe this to be primarily weather related and expect to see a bounce back in construction in the coming months.   Home prices continue to boom, amid a shortage of inventory and high demand.     


March 31, 2021

Q1 Return







S&P 500



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The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.