By Scott J. Brown, Ph.D., Raymond James
Episode IV, A New Hope – Some very good news on vaccine development, along with expectations of a divided government, helped propel the stock market this week. The economic impact of a vaccine depends on a number of things. We still have a long way to go and there are plenty of logistical issues to be worked out, but there is hope. Yet, while the rollout of one or more vaccines is a key factor, so is the starting point. COVID-19 cases continue to surge and the near-term economic outlook is more cautious.
This Week – The mid-month economic reports are expected to remain consistent with a moderate pace of growth. Unit motor vehicle sales edged down last month. September sales (+1.9%) were exaggerated by the seasonal adjustment (weaker back-to-school sales in August, less of letdown in September, which shows up as a seasonally adjusted gain). Industrial production should continue to improve. Residential construction activity should be unseasonably strong. None of this may matter much for the financial markets, which are likely to be focused on the virus and vaccines.