2021 Outlook – Forging a path forward

As we turn the calendar into 2021 and simultaneously exhale (albeit through our masks), serious questions call for clarity and resolution. When can we leave distancing and masks behind us and return to more stable social and economic activity? How will economic priorities and tax policies change under new Washington leadership? Will a growing Wall Street and Main Street disconnect reconcile itself in 2021, and if so, how? Let’s explore:

  • COVID-19 vaccines and therapeutics are coming but will face questions about timing, availability and the impact of possible virus mutations. Markets will quickly and efficiently arbitrate their effect on economic growth, confidence, and consumption. Much will depend upon this critical path in 2021.
  • The postelection picture in Washington could well result in changed policies. A reset of pre-2017 regulation levels (or new ones) for many industries, more limited fiscal spending initiatives, or higher corporate and individual tax rates but a more multilateral approach to international trade policy may be in the offing for 2021. Any changes in policies will be closely monitored by markets for their cascading influence.
  • Wall Street recovered quickly, but many parts of Main Street are struggling to overcome the pandemic’s economic costs. History teaches us that the two often don’t diverge for long periods of time. Therefore, economic policy and priority alignment will be critical to reconciling both onto a similar recovery path this year.
  • Patience and perseverance have a magical way of encouraging progress. Still, one can be forgiven for feeling fatigued from the challenges of this past year. Almost always, economic recoveries have arisen from dark points in our history, and investors know well that some of the best investment opportunities often present themselves from non-consensus ideas. These patterns are developing again. Our report highlights how these potential investment opportunities may arise in 2021.

Wells Fargo Investment Institute, Inc., is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.

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Wells Fargo Investment Institute provides its forecasts for the economy and markets and highlights potential investment opportunities for 2021.