Consumer Confidence Plummets, Anemic Earnings Projections, and a Spiking M1

Though not perfect and certainly not without several threats still looming in the background, the U.S. has seen a surprisingly strong economic recovery in the months since the onset of the Covid-19 crisis. Retail sales have fully rebounded, the housing market is booming, and household income is actually higher now than it was back in March—though that last point is primarily attributable to the $600 boost to unemployment that’s set to expire this month. But consumer confidence remains significantly below pre-crisis levels, and looks to have reversed course since its initial steps toward recovery. Earnings projections have followed a similar trajectory, with analysts expecting minimal growth going forward. With roughly 25% of S&P 500^® Index companies reporting this week, could we be in for some disappointments? It’s taken a massive amount of government stimulus to keep the economy afloat throughout the crisis—gross federal debt just saw its single largest year-over-year increase ever—and talks in D.C. begin today on what the next stimulus deal will look like. Rumor has it we could be looking at another $1 trillion+ package. The global economy has been flooded with liquidity in recent months and additional stimulus could mean it’s in for more; could that lead markets higher or spell trouble and spark inflation concerns down the line?