H2 2021 Investment Outlook: Return to (Much Closer to) Normal

The third quarter in the United States should finally mark a return to a much more normal state of affairs as not only travel and dining resume, but also the daily commute for many office workers.

For markets, the third and fourth quarters are likely to bring a continuation of high growth and high inflation, but over the next few months it should become clear that growth is peaking. Estimates suggest GDP should grow 8.3% in the third quarter, less than the 9% expected in the second quarter.1 Importantly, core inflation may remain at 3.5% and 3.7% in the third quarter and into the fourth quarter, respectively, and well above 2% in 2022.2


We see three major market implications of these economic developments:

  1. Public market returns are likely to be positive but more modest in H2 2021;
  2. IPO markets should remain robust in H2 2021, benefitting private market investors; and
  3. Inflation-protected assets like real estate will still be needed for above 2% inflation.