Commentary

“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.”

– Sam Ewing, former major league outfielder

In 2020, COVID-19 caused massive shifts in the capital markets:

• The U.S. stock market experienced one of the most extreme roller coaster rides in history, with the S&P 500 index crashing 35% in the first quarter only to end the year up 18.4% from 2019.

It is safe to say that when the year started, few were thinking about words and phrases such as those above. We knew however, that 2020 was an election year, with all the fanfare, hyperbole and at times disingenuousness that is part and parcel of American politics.

In some sense, words fail to capture the devastation – physical and psychological, financial and economic – that Covid-19 has unleashed on the globe in a few short months.

For our economic commentary this quarter, we are sharing a timeline of the extraordinary events of the past few weeks and months.

As we begin the third decade of the 21st century, it is useful to briefly look back at the ten years that just ended: a decade that changed the way we interact with both technology and each other and one that produced investment returns that few would have predicted.

As we head into the final quarter of 2019, investors continue to evaluate a significant (and growing) set of uncertainties.

As of July, the current U.S. economic expansion, as shown below, is the longest on record.

The U.S. economy looked weak during the first quarter of 2019, as the Government shutdown, unusually severe winter weather, and the fourth quarter 2018 stock market sell-off all coincided with a continued decline in global growth.

The U.S. economy generated strong growth in 2018 and fundamentals remain relatively solid heading into the first half.