LPL Market Signals: Raising Economic and Market Forecasts…Again

Economic Blog

Wednesday, April 7, 2021

On the LPL Market Signals podcast, Equity Strategist Jeff Buchbinder and Asset Allocation Strategist Barry Gilbert update forecasts based on how the economy’s recovery from the pandemic, aided by vaccine distribution, massive stimulus, and the desire to return to normal, continues to surpass expectations.

Strong March jobs report. The US labor market grew the most in seven months in March, as the economy added 916,000 jobs, trouncing the median economists’ estimate for a 660,000 gain (source: Bloomberg). Segments of the labor market most dependent on in-person interaction saw the greatest gains, notably hospitality and leisure. We expect to see bigger job gains in the coming months, potentially over one million per month into the summer, helping to close the gap on the more than eight million jobs still needed to get back to the pre-pandemic peak.

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Raising U.S. and global economic growth forecasts. An accelerating vaccine rollout, American’s desire to resume somewhat normal lives, and massive stimulus set the stage for booming growth in the U.S. economy this year. Our 2021 U.S. GDP growth forecast goes from 5—5.5% to 6.25—6.75%. A stronger U.S. growth outlook pushes LPL Research’s expectations for growth in emerging markets and globally higher as well.

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Raising our 2021 S&P 500 earnings estimate. With more economic growth comes more revenue opportunities for corporate America. Companies have been doing a tremendous job of adapting the pandemic, innovating, and generating efficiencies. We are leaving our year-end fair value target for the S&P 500 Index unchanged at 4,050—4,100 for now in anticipation of lower stock valuations as interest rates rise.

Raising our year-end target range for the 10-Year U.S. Treasury yield. Stronger economic growth and more stimulus spending may put further upward pressure on yields. We have raised our forecast for the US 10-year Treasury yield from 1.25—1.75% to 1.75—2.00%.

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You can watch the full video below and directly on our YouTube channel. Please be sure to subscribe to the LPL Research YouTube channel so you don’t miss anything! Also, if you like our channel, please give us a positive review—it helps more than you know!



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