Global economic forces
Tailwinds
- Still supportive monetary and fiscal stimulus policies
- Relatively low interest rates
- Pent-up demand created by the economy’s stalled reopening
- Expanded COVID-19 vaccinations accelerate the global economic reopening
- Increased savings and solid growth of household wealth
- Supportive business investment
- Pending infrastructure and social spending legislation
Headwinds
- Supply-chain disruptions and labor shortages
- Rise in coronavirus variants slowing the economy’s reopening in the U.S. and abroad
- Geopolitical risks posed by China and other global hot spots
- Housing pressured by rising interest rates and home prices
- Purchasing power squeezed by rising inflation
- Worsening credit quality as forbearance and other loan relief ends
- Rising fuel costs
Source: Wells Fargo Investment Institute, as of September 30, 2021. Subject to change.
Key Takeaways
- Tailwinds have been outweighing headwinds in propelling global growth above 5% in 2021. They center on the important consumer sector, accounting for over two-thirds of total demand.
- The most visible risk in the outlook is an overheating economy driving increases in inflation and interest rates, exposing a more credit-sensitive economy and financial market to a slowdown.