In the United States, a more recent trend of daily COVID-19 vaccinations approaching 1 million reaffirms our outlook for GDP growth above 5% in 2021. Additional fiscal stimulus would introduce the potential for further upside to growth.
Amid hope that COVID-19 vaccines drive immunity and enliven economic activity, investors are starting to wonder what happens when 'whatever it takes' fiscal and monetary policy gives way to an unwinding of bold actions. But that may not happen anytime soon.
U.S. equities outperformed their international counterparts by 8 percentage points per year on average over the 10 years ended December 31, 2019. However, our proprietary Vanguard Capital Markets Model (VCMM) suggests that this outperformance is unlikely to persist over the next 10 years.
Based on promising signs that COVID-19 vaccines currently in trail are effectiveand production capacity allows for doses to be delivered early-to-mid-2021, Vanguardsees an increased likelihood of the U.S. economy reaching pre-COVID-19 output levelsbefore the end of 2021.
Beyond the uncertainty surrounding the ongoing global Covid-19 pandemic, we see room for market volatility to increase heading into year-end. The US election, a stalled US fiscal relief package and complications around Brexit all have the potential to weigh on investor sentiment and move market prices.
11 Nov 2020
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