To speed up or to slow down?

To speed up or to slow down?

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This is the current question I think of when I think of the current economic state. It seemed like just last week when we were worried about the economy recovering too fast. The inflation worries were high, at least for me. With the S&P sitting at all-time highs and companies being valued at multiples much higher than usual, it seems like the market overall is sitting on a very slippery slope. The Fed has also had talks of tapering bond purchases by the end of the year. This less accommodative policy would signal to investors that the market may be slightly overheated.

However, it seems like everyday the S&P keeps going higher and higher. Fidelity Investments predicts that we are in the later end of the early business cycle. There are many economic indicators that show that we have still yet to hit our peak economic output. For example, the Delta variant has caused several supply chain issues delaying the recovery efforts. Employment has still not hit normal levels, even though jobs have seemed to recover well. As unemployment benefits end in the coming week, we hope to the see unemployment return to normal levels, which one would assume to drive up economic output. This again would show another green light for recovery.

After doing my research, I believe there is still some expansion that will happen in the economy in the coming months. Though asset prices are high, I believe they could keep going. However, I do think that as asset prices keep rising, there will be a shift towards more value-oriented stocks.

I would love to hear your thoughts on this subject, and I look forward to any discussion or feedback that you all have on this topic. As mentioned in previous posts, I am a college student in @trostparadox class. My goal is to add value to the community this semester, and I hope that these posts will prove to be beneficial to the Leofinance community.