In his Daily Market Notes report to investors, while commenting on the third coronavirus booster shots, Louis Navellier wrote:
Q2 2021 hedge fund letters, conferences and more
The Fed in preparation for Chairman Jerome Powell's Congressional testimony this week issued a report that essentially implied that material/good shortages and hiring problems are impeding economic growth.
Obviously, the fact that 6.8 million jobs disappeared from the pandemic is becoming a big policy problem for the Fed, since if these jobs do not come back, it will become a big mid-term election problem.
Another complication is that Israel approved a third shot for its Covid-19 vaccine. Although the U.S. may follow Israel and approve a third booster shot, most Americans do not want to return to any Covid-19 lockdowns like the rest of the world. Most Americans are sick of the lockdowns and I suspect that even if a third booster shot is approved, only elderly and high risk people may get it.
There is no doubt that Covid-19 is a jobs killer, so if the Biden Administration makes a big deal about more people getting Covid-19 vaccinations and a third booster shot, they run the risk of enacting more shutdowns and squelching overall economic growth. Right now the Atlanta Fed is estimating second quarter GDP growing at a 7.9% annual pace.
The other risk to economic growth is inflation squelching business and consumer demand. The Wall Street Journal reported that the tariffs that the Trump Administration imposed on China and the Biden Administration is keeping the price of some imports from China higher, like solar panels. We have been in the midst of “demand push” inflation due to material/supply shortages. As supply catches up with demand, inflationary pressures are expected to moderate. Furthermore, some of the bond vigilantes are increasingly sounding like the Fed and expecting inflation to be “transitory.”
