We pick up where we left on Monday, an "impartial" team of experts (the Congressional Budget Office) tasked with helping Congress make informed decisions, thinks the economy will be pretty hot this year, with no concerns about inflation.
This is before any Biden policies, before any additional aid, and before any massive multi-trillion dollar clean energy economic transformation spend.
We now have more support for this CBO projection - the chart below gauges economic activity in the services sector. Not only is it a V-shaped recovery, but activity has returned to early 2019 levels.
Services is the segment of the economy that is thought to be destroyed from the virus restrictions. Some areas of the services sector have been (hotels and food services), but in large part, despite the perception, the services economy has boomed since April. Real estate has been the hottest, followed by (in order of strength) construction, wholesale trade, finance and insurance, transportation and warehousing, health care, management and support services, agriculture, forestry, and fishing and hunting.
Also in the January report from the Institute of Supply Management (ISM), the survey details prices paid. Prices paid by service organizations for materials and services are running hot.
Commodity prices that were more expensive in the month of January? All of them.
So, prices are up, inventories are down. Meaning inventories will be rebuilt at higher prices.
With all of this activity, employment in the services sector is expanding at a pre-pandemic rate in January.
Again, this all confirms a good economy (and getting hot), thanks to the fast and aggressive response from the Fed and from the Trump administration within two weeks of the economic shutdown, back in March of last year. That kept the economy alive and has proven to be a more than sufficient bridge to a vaccine. With that, we're not just on path to return to pre-pandemic growth levels, we're on path to exceed that, and exceed long-term trend growth this year (maybe by a lot).
As I asked on Monday, why would Congress approve another $1.9 trillion in "aid?"