Looking Back at the Markets in Q1 and Ahead to Q2 2021

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The first quarter looks to be the turning point, both for the pandemic here in the U.S. and for the economic damage it has caused. While risks still remain, especially in the short term, the significant progress we made in the first two months of the year started coming to fruition in March, signaling that we are through the worst of it.

Looking Back

Progress in pandemic. As of January 1, 2021, there were more than 230,000 new cases per day. One out of eight people tested—and testing was close to an all-time high—was positive for the virus. More than 120,000 people were in the hospital because of COVID. Essentially, no one had been fully vaccinated, and things were getting worse.

Fast forward to April 1, 2021, and case growth was down from 230,000 to 67,000. Positive tests were down from more than 12 percent to under 5 percent. Hospitalizations were down from 120,000 people to under 35,000. And vaccines were being deployed at a rate of 3 million per day, with almost one out of five people fully vaccinated and almost one out of three having had at least one shot. The turnaround has been stark.

Economic healing. The same improvement holds for the economy. Job growth was negative at the end of last year, down by 140,000 in December. But March of this year saw 916,000 new jobs, the third month in a row of rising increases. Consumer confidence was close to the pandemic lows at the end of last year but increased by more than one-quarter by the end of March, back to a pandemic high. Business, which remained surprisingly confident during the pandemic, did even better, with manufacturing confidence moving to the highest level since 2006 and the service sector to the highest level ever.

While the improvements started earlier, March marked the point where the pandemic really could be seen to be under control—and, with that, the return to an open, normal economy accelerated.

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