2Q 2021 brought some important indicators of the future direction of the economy. Concerns about inflation and a high level of uncertainty among investors remain. The future is still shrouded in fog. The question is, should we continue staying the course?
Q2 2021 Highlights:
- The U.S. economy continues to recover in Q2 2021. Economic growth dynamics were stronger than in Q1 (6.5% vs. 6.4%), but analysts’ expectations for GDP growth of 8.5% were not met.
- Inflation in the United States dynamically increases. Total inflation for June reached +0.9%, while it grew at +0.6% over the past period. This was the largest increase in CPI since August 2008, just before the start of the U.S. financial crisis.
- From Q1 2020 to Q2 2021, the number of dollars in circulation has increased by almost 20%. The significant increase in dollars in circulation has a significant inflationary effect. This makes a strong argument for the claim supporting high inflation rates in the near future, but a critically important point in the Fed’s effective inflation management is its ability to influence inflation expectations.
