Some Things Old, Some Things New: Predictions for 2021

The old year has ended. (We stayed awake past midnight on New Year’s Eve, just to be sure.) Looking ahead, we’ve compiled an assortment of predictions for those who prefer not to rely on their own crystal balls to anticipate what the coming year will bring.

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Anyone looking for clarity or consistency in the March economic data will have to look hard and will likely be disappointed. If there is a pattern, it is disjointed – a tug-of-war between competing narratives, one suggesting a confident upward trajectory and the other cause to question it.

A robust January employment report confirmed the economy’s strength, while triggering a bond sell-off that sent mortgage rates higher in early February. 

The big economic news for this month is the much stronger than expected employment report; the big question is, why in the face of strong labor market, consumer spending (reflected in retail sales) has been trending steadily downward.

Although Fed Chair Janet Yellen admits that policy makers are baffled by persistently low inflation, they are undeterred by the failure to meet the 2 percent target they have set as the indicator that higher interest rates are in order, and still on track to boost interest rates once more this year.