President Biden’s $1.9 trillion stimulus package was passed last week. We expect this to provide a significant boost to the economy and to market sentiment, helping add fuel to the economic recovery in 2021-2022. Recent data from the US indicates that even before this stimulus reaches the real economy, the recovery is already powering ahead.
The ISM Manufacturing PMI jumped to 60.8 in February, beating market expectations of 58.8 (any reading above 50 indicates expansion). This is the strongest expansion of factory activity in the US since February 2018. The IBD/TIPP Economic Optimism Index rose to 55.4 in March – the highest since February 2020. Construction spending also hit an all-time high in January, rising +1.7% from the previous month and easily beating expectations. According to IHS Markit, monthly US GDP rose +1.4% in January – the first increase since last October. This increase was accounted for by an uptick in personal consumption expenditure – a very positive sign, as it suggests consumers are spending the excess liquidity in the economy. Inflation, however, has not yet followed the stronger economy higher – an important fact, given that the recent market turbulence was driven by inflation concerns.
Good news on the vaccination front keeps coming
New research now shows that several weeks after receiving their first dose of coronavirus vaccine, a patient’s risk of hospitalisation with the virus plummets. In the case of the Pfizer vaccine, this risk falls by 85%; in the case of the Oxford-AstraZeneca vaccine, it is 94%. These are incredible, and unexpected, results that signify major protection from the disease even before the full two-dose inoculation has been delivered.
US authorities have now also cleared the Johnson & Johnson COVID jab for widespread use. This is important, because this vaccine is delivered by a single dose, which could further accelerate vaccination programmes around the world.
Worldwide 280 million doses have now been administered (4% of the world’s population). That may sound low but administering anything to 4% of all humans is an incredible feat, and this has been achieved in just three months. This rate will continue to rise and start to make a meaningful impact on the pandemic soon, in fact we are already seeing meaningful effects in countries with more advanced vaccination programmes.
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