By Scott J. Brown, Ph.D., Raymond James
Near-Term Concerns – The news on vaccines has boosted optimism for the economy for 2021. In contrast, near-term developments have been unfavorable. COVID-19 cases have surged and in all likelihood will rise further in upcoming weeks. Lawmakers remain in a stalemate on further fiscal support as a number of benefit programs and eviction moratoriums are set to disappear at the end of this month. Investors appear willing to look beyond these concerns.
This Week – The Federal Open Market Committee is expected to leave short-term interest rates unchanged. The Summary of Economic Projections will include new graphs on senior Fed officials’ assessments of risk and uncertainty. In the September dot plot, most expected the federal funds rate to remain near 0% through 2023. Will the news on vaccines change that? Perhaps, but not a lot. In his press conference, Chair Powell is likely to plead further for fiscal support. Retail sales are expected to have risen modestly in November (unit vehicle sales fell and gasoline prices dipped), but seasonal adjustment could magnify the effects of the pandemic.