Greetings. The first quarter of 2021 has so far been a continuation of last year with equity markets
having positive returns both here and abroad. In the U.S. we have seen smaller, and more valueoriented companies lead the recovery since September of last year. These companies were the most
negatively impacted by the Covid-19 recession, and investors believe these companies will be the
biggest benefactors of the reopening of our economy. Since January, the number of people in the U.S.
testing positive for Covid as well as the number of Covid hospitalizations continues to drop significantly,
even as states continue to reopen after a year of lockdowns. This all bodes well for a continued
It is very interesting now that we can look back over these past 12 months of Covid lockdowns and see
how this downturn has compared to other recessions since the turn of the century. It was predicted
early on that states and municipalities would suffer greatly from these shutdowns and this did not
happen. State and local governments get most of their funding through income, property, and sales
taxes. Property values across the country are up 15% from last year, retail sales finished up for 2020,
and median household incomes went up last year.
U.S. Corporations refinanced record amounts of debt last year at near all-time lows, so their balance
sheets are shored up. Even with U.S. consumers locked-up at home, they did record amounts of online
shopping, while they as a group have amassed an additional almost $2 trillion of savings. U.S. household
net-worth is at an all-time high, which is unprecedented coming out of a recession. I cannot remember
a time in recent history like this where businesses and consumers as a whole are in such a strong
financial position coming out of a recession. This, along with the federal government passing record
amounts of stimulus, is setting us up for an economic recovery like we haven’t seen in a long time/if
ever. The significance of the Federal government stimulus can’t be underestimated. We as a country
spent $4.1 Trillion to fight WWII, we will spend over $5 Trillion on Covid relief.
It appears to me that we will have a couple of phases in the response to Covid, the first part being what
we have experienced these last 12 months - the use of online shopping, video calls, and use of the
internet/technology. People are buying new homes, remodeling existing homes, buying new appliances
and technology for their homes … anything to make being stuck at home a better experience.
This next phase of recovery will be more about travel and leisure activities. Google is reporting daily
record searches for travel, the airlines are seeing a spike in summer travel plans, and TSA is reporting
record number of travelers since the lockdowns began. Restaurants are allowing in-person dining in
most cities now and even movie theaters are reopening. I read an article last week discussing the music
industry and how it wants to get back to live concerts this year, though as it plans for these upcoming
events, it cannot find people to help behind the scenes. The “roadies” have had to move on to
something else to survive this past year. This is already becoming a big challenge for companies as we
move further into this recovery, “how do we find enough qualified people”? Last week the U.S. Labor
Department released data showing we added almost 1 million new jobs in March, which is fantastic
news, and I believe this trend will continue for several months. This will be exciting to watch, but we’ll
have to be on the lookout for early signs of inflation, which could lead to the Federal Reserve to begin
slowing things down. We will talk further on this in upcoming articles.
As we approach mid-April, the IRS has moved back the income tax filing deadline to May 17th for
everyone except those living in Texas, Oklahoma, or Louisiana, who have until June 15th. IRA
contributions can be made up until your filing deadline. The first quarterly estimated tax payments will be due on April 15, all other payments can be made with your return. Please let us know if you have any
questions regarding these new deadlines. We continue to hold most of our meetings by Zoom and plan
to do so through the next couple of months. As we get into fall meetings, we hope to have more of
them in person. We will keep you informed.
Brett S Carleton, CFP, ChFC