Slowing Down?

August 10, 2021
Slowing-Down
While it may sound negative a slowdown in economic growth might be a good thing.

 

The first half of the year the economy came roaring back from the COVID-induced recession. Subject to revision, we had the economy growing at a 6.4% annualized rate and over three million jobs added during the first six months of the year, as well as almost a million added in July. Now many market analysts, such as Goldman Sachs, are expecting a slowdown for the second half of the year and into next year.

Actually, a slowdown should be expected, considering the fact that the economy can’t continue growing at six-plus percent per year. But there are bumps in the road which are being cited for a sharper slowdown than we expected.  The COVID-Delta variant is one such bump. Certainly, any continued outbreaks could cut spending on services, which is a huge contributor to the entire economy.

Any slowing of the economy might bring some welcome news as well. For one, inflation should simmer down as the supply chain catches up.  In addition, interest rates are likely to remain lower for a longer period of time. Finally, the housing market might reach a balance with more listings available. Though the listing shortage continues today, we are seeing some signs of abatement as the pandemic has eased.