Market Perspectives
Zevin Asset Management
Q3 2024 Market Outlook

Maybe it really is different this time. A typical business cycle usually consists of an overheating economy followed by higher policy rates imposed by central banks. This eventually leads to a slowing economy, and in 6 out of the last 7 monetary tightening episodes in the U.S since 1970, the economy has fallen into recession. Higher lending rates slow consumption, leading to layoffs, which further slows consumption and more layoffs, and so on. However, this cycle has been different so far. When the Fed began raising interest rates in 2022 to fight inflation, the personal consumption response was much more muted than usual, thanks to previous emergency pandemic stimulus. The U.S. economy has slowed somewhat in response to tighter monetary policy, but employers have been mostly reluctant to implement significant layoffs with the fresh and painful memory of the 2020-2021 pandemic reopening when consumer demand rebounded sharply but employers had a hard time finding workers to satisfy demand. So-called “labor hoarding” has become a significant attribute of the current economic cycle, which has contributed to the relative strength in the labor market, consumption, and the economy in general.

Market Perspectives

Inflation, Powdered Milk & Toothpaste

As an undergraduate student I recall my macroeconomics professor describing inflation as toothpaste, “Once it’s out of the tube, it’s extremely difficult to get back in.” Every time I brush my teeth these days I think of Professor Sims and the point he made; should inflation get out of control it becomes very difficult to rein in. Inflation in raw materials can create more inflation as higher input prices force higher output prices, which in turn leads to wage increases as workers demand higher pay so they can afford higher goods prices. Manufacturers then further increase prices to protect their profits and make up for higher labor costs. And so on.

2020 Year in Review

Philip Hergel
Senior Quantitative Analyst

2020 Can't End Fast Enough

Imagine if the 1918 Spanish flu pandemic, the Civil Rights Movement of the 1950s, the 1930s Great Depression, the nightmarishly messy U.S. presidential election of 2000, as well as unprecedented devastation from global natural disasters all occurred in the same calendar year — well, they just did.

2020 will be remembered as the year to forget. It will be remembered for the 1.4 million people (and still counting) who died globally due to COVID-19. It will be remembered as the year of brutal economic turmoil for millions of people who lost their jobs during the pandemic. It will be remembered for the immeasurable anguish of Black people being killed by police officers and the increasing awareness of the Black Lives Matter movement across America. It will be remembered for the uncontrollable raging wildfires around the world and the most active hurricane year on record. It will be remembered for the attack on American democracy as the presidential election results were disputed, litigated, and doubted by millions of Americans. There is no negative adjective strong enough to describe how bad 2020 was. If 2020 were a drink, it would be a colonoscopy prep. Good riddance 2020…bring on 2021! 

To read more download a PDF of our Year in Review.