RESEARCH // October 18, 2021
Quarterly Commentary Letter – Q3 2021: A Tale of Two Parts

The third quarter began on an upswing. Covid-19 was in the rear-view mirror – or so it seemed. Growth was accelerating. Expectations were high for a “normal” return to work and school in the fall. Financial markets continued to rise to new records.

The picture changed sharply during the quarter – as the ravages and uncertainties of Covid-19 continued to bedevil the global economy. By the quarter’s end, economic indicators showed a mostly flat summer – supply chain disruptions and labor shortages hampered production. In China, growth slumped to just 0.2 percent from Q2 (4.9 percent on a one-year earlier) with power shortages and a property slowdown adding to Covid woes. Health concerns across the globe led to a pullback in travel and other services and in the US probably contributed to disappointing jobs numbers. Payrolls rose by only 194,000 in September, after 366,000 in August. Both fell far short of the million plus increase recorded in July. But inflation stayed persistently high. Consumer price increases hovered between 5.2 and 5.4 percent year-on-year through the third quarter, a 13 year high. As whispers of stagflation grew louder, equity markets slipped across the globe. After stocks hit new peaks in July and August, September followed with the first negative month since January.

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