Thu. Jan 27th, 2022

The economic recoveries from the COVID-19 pandemic have been rapid and impressive. This video highlights our views on global economies and how they have changed since early 2021.

Learn more about our mid-year economic and market views.


In our 2021 economic and market outlook, Vanguard discussed the critical nature of COVID-19 health outcomes. We assumed that an effective vaccine would emerge, but we noted that the recovery varied by industry and region.

The economic recovery has been rapid and impressive, as we have predicted, especially where vaccines have reached most people.

Our revised full-year GDP growth forecasts reflect the extent to which we have retreated from the depths of the pandemic. There are several updates since the beginning of 2021, and some are updates, which reflect the challenges of the future and a wide range of potential outcomes.

Demand for goods and services increases as economies reopen, especially in the United States. Shortages of supply have helped raise prices.

We anticipate that core inflation will persist above the Federal Reserve’s target this year in the United States and move toward the targets of other developed markets. Inflation will remain a major issue until 2022.

While central banks may slow the pace of asset buying earlier than initially expected (beginning a gradual move away from accommodative monetary policy), we believe it will be largely in 2023 before the labor market and the dynamics of inflation lead them to raise policy interest rates.

Low rates helped keep economies afloat at the start of the pandemic. They now support solid recoveries.
And what about our market prospects? Our ten-year annualized profitability projections are lower than at the beginning of the year after strong market gains. Today’s higher valuations make profits harder to achieve.

The news is better for fixed-income investors, as higher market interest rates drive our ten-year yield expectations to a large extent.

Look for Vanguard for information that puts long-term economic and market trends in perspective.

“A half-yearly update of our economic outlook for 2021”, 4 out of 5 based on 228 valuations.

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