The Road Ahead


Chart of the Week – The Road Ahead

We believe manufacturing and increased consumer spending should lead to U.S. GDP growth well above consensus estimates.

February’s ISM Purchasing Managers Index indicates we are in the initial stages of an inventory rebuild. New customer orders remain near a 14-year high, while customer inventories are at record lows. Meanwhile, consumers are flush with cash. Thanks to stimulus measures, Americans have saved nearly $3 trillion in the 11 months following February 2020. That’s nearly three times the savings during the same period from 2019-2020. We believe that most of the $1.8 trillion difference, or 8.4% of GDP, will continue to drive strong consumer spending over the next 18 months. And let’s not forget the estimated $425 billion in stimulus checks that are expected this month.

Accumulated Savings

Source: BEA, Bloomberg, Ivy Investments. The ISM Purchasing Managers index is a monthly indicator of U.S. economic activity based on a survey of purchasing managers. Dates shown are March, 2019 through January, 2020, and March 2020 through January, 2021. This chart is being provided as a general source of information for education purposes only, and is not intended as a recommendation to purchase, sell or hold any specific security or to engage in any investment strategy.