As the largest international financial center and approximately 330 million people that account for a GDP worth almost USD 21 Trillion in 2020 despite the global crisis, the United States has a circular business environment that is attractive both as the destination for investments and business across nations looking for investors.
The global crisis has affected the U.S foreign direct investment inflows up to a 49% drop, with wholesale trades, financial services, and manufacturing being the most affected industries following the COVID-19 pandemic outbreak.
However, the country has shown continual economic recovery due to the government and private sectors’ intervention regarding the pandemic, namely the COVID-19 vaccine deliverance, fiscal stimulus packages, and the rapid action towards building supply-chains redundancies, improving data management, eventually increasing technology acceleration.
During 2020’s second and third quarters of 2020, productivity is at the highest rate with 10% in the second quarter and 4.6% in the third quarter.
A big part that sustains consumer behavior in the U.S is the fiscal stimuli given at the time of the economy’s reopening and vaccine acceleration in the middle of the year, improving demands for tourism activities and taking part in the sector’s recovery.
To add, the Fed plans to keep its benchmark rate at 0 until early 2024, slowing the rise in 10-year yields and uniforming corporate earnings growth.
Closing at a near all-time high, the U.S equity market also proves that investors have a positive sentiment for the market through the unprecedented levels of monetary and fiscal policies boost.
The investors’ current concern is whether the U.S government would facilitate a sustainable monetary policy as the groundwork for long-term recovery. With the Fed’s new flexible average inflation, investors expect stable interest rates and strong economic growth instead of a rapid yet turbulent rate.
However, the government’s approach to setting a low bond yield triggers assumptions on whether the government provides an attractive means of multi-asset products.
The falling net reflects the U.S government’s reluctance towards their pandemic-containment efforts that might lead to a double-dip recession due to foreign direct investment hurdles due to China’s situation and the Eurozone nations. The low rate environment, in contrast, is a positive addition for U.S investors as they look for higher-yielding fixed-income investments.
U.S corporate rebounds in 2021 will produce positive returns, inviting investors to consider the U.S large and mid-cap equities and supporting emerging market equities to reach their economies of scale and eventually pedaling the global economic growth.
But volatility is likely to exist with inflations due to the fiscal stimuli and the productivity rate, creating an inverse relationship between the companies’ inflation and the price investors are willing to pay.
For investors looking for income and are comprehensive about their risk profile, U.S equities’ dividend remains an attractive offer despite its presumptively rising interest rates. Strong U.S first half quarter growth seems promising that it would maintain its condition by the end of 2021, as long as the U.S private sectors provide re-employment and trigger consumer demands to mitigate the damage done during the COVID-19 pandemic.