U.S. economic growth is accelerating as vaccinations rise and social-distancing measures ease, but hopes for a long-lasting spending boom may hit a couple of speed bumps. Vaccine rollouts in major countries are proceeding at different speeds, but stock market performance contradicts what vaccination data would seem to imply for investors. Meanwhile, inflation-adjusted longer-term Treasury yields have risen as investors anticipate stronger economic growth.

U.S. stocks and economy: Moving, but with bottlenecks

With regional social-distancing measures easing, mobility is gathering steam and the path to a broader reopening is becoming clearer. Many believe that the recent massive buildup in savings will be spent quickly as the economy broadly reopens. However, we think it is premature to assume a long-lasting spending boom will emerge—not only because consumers’ spending habits may have become more prudent, but also because the math for a rebound in services is much different than for goods.

The additional COVID-19-related fiscal relief measures implemented in late 2020/early 2021 bolstered consumers’ finances. As you can see in the chart below, the personal savings rate (unsurprisingly) spiked higher after households were mailed a second round of checks at the end of the year.