The LPL Research Outlook 2021: Powering Forward is here to guide us to a world very different from the one we're leaving in 2020. Areas of the economy have been damaged and may never fully recover, but other areas will adapt, reinvent, and help reinvigorate growth.
2021 is primed to deliver advances to further limit the impact of COVID-19, and the goal remains keeping the economy as open as possible while keeping people safe. Continued progress in the response to COVID-19, including further stimulus measures by the government, will be key to sustaining the economic recovery. As the pandemic subsides, restrictions are lifted, and consumers’ daily lives return to something close to normal, the pace of the recovery most likely will pick up speed—probably in the middle of 2021.
Another major milestone will be moving past the market uncertainty caused by presidential elections. Historically, the post-election environment has been positive for the stock market. S&P 500 Index returns have been strongest with a divided Congress—one party controlling the House of Representatives and the other party controlling the Senate. A split Congress with President-elect Joe Biden in the White House could be viewed as friendly to the markets.
The makeup of the Senate will have significant policy implications. A fifth COVID-19 relief bill may be the first priority for the new administration, but to be approved by a Republican-controlled Senate, it most likely will need to be smaller than previously discussed. With an effective vaccine coming soon, Republican Senators may balk at another trillion dollar package. That would leave the Federal Reserve potentially as the only other policy support in Washington, DC, if COVID-19 causes further financial and economic stress.
Looking back, one constant in this difficult year has been the value of personal and professional relationships. Sound financial advice charted a long-term path for many investors that kept them from getting off course in a turbulent 2020. There still will be risks to navigate in 2021, but it’s important to remain focused on long-term investing goals, stay on course, and power forward.
View the complete publication, featuring insightful commentary, economic and market guidance, and more details on these themes and our investment recommendations.
IMPORTANT DISCLOSURES: This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All index data from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This research material has been prepared by LPL Financial LLC.
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