May 2021 Economic Forecast

Durability of Ascent: 3 Reasons Why It Matters

  1. How much you are willing to invest in your company via capital equipment and people is often a function of how long the upward run will be.
  2. How much credit you are willing to extend to customers and potential customers will be limited if you think the rising trend will soon end.
  3. This could be a great time to make an acquisition, assuming the economy supports the risk – which a longer rising trend tends to do.

Below are three trends that empirically indicate that the rising trend for the US economy is going to endure. Our forecast has GDP and US Total Industrial Production rising through 2023. These trends support that outlook; however, there is another fifth element. Market societies such as ours, left to their own devices, will rise until either a) distortions and imbalances build up which inhibit growth, or b) some externality circumvents the normal propensity for rise (as COVID did). We do not see any looming distortions or imbalances developing within the next three years that would end the current ascent. That includes our analysis of tax and spending changes; however, that doesn’t mean the rate of rise can’t be changed by these factors.

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