By David Wismer In early May, my previous article asked the questions, “Have the Roaring ‘20s returned?” and “How good will it get for the economy?” as optimism improves regarding many significant aspects of the COVID pandemic in the U.S. Since then, the overall news has gotten even better: - According to the New York Times’ latest tracking update this weekend, “Case numbers in the United States continue to plummet. About 23,000 new infections are being identified each day, the fewest in nearly a year.” - The CDC’s vaccination data for individuals over the age of 18 shows more than 62% have received at least one dose, and more than 51% are fully vaccinated. Almost 75% of those over 65 years of age are fully vaccinated. - The CDC unexpectedly announced sweeping new public health guidance on May 13, with continuing updates to be found on its website regarding masking, physical distancing, and testing protocols for vaccinated and unvaccinated individuals. - We saw images this holiday weekend of 135,000 attendees at the Indy 500 (sold out at about 40% of capacity), good turnouts at NBA playoff games, and various photos of people enjoying beaches, parks, and restaurants. Economic and market news is also encouraging - According to CNBC , “For the month of May, the 30-stock Dow and the S&P 500 gained 1.9% and 0.6%, respectively, posting their fourth up month in a row.” They also note that the small-cap Russell 2000, “which is more leveraged to the economic reopening, eked out a slight gain this month,” posting an “eighth straight positive month for the first time since 1995.” - The Chicago PMI Business Barometer , produced with MNI, “jumped to 75.2 in May, the highest level since November 1973” and easily surpassed expectations last Friday for a reading of 68.0. - According to the news release summarizing the most recent IHS Markit PMI , “US manufacturing growth continued to accelerate in May. … The upturn was driven by a record expansion in new orders, while output growth strengthened. Meanwhile, supply chain disruption led to soaring cost pressures.” - For the week ending May 15, the Department of Labor reported that new unemployment claims, while still elevated, came in at the lowest level since March 14, 2000. - By all accounts, travel for the holiday weekend in the skies and on the roads saw a significant uptick, with the TSA reporting the highest number of travelers since the beginning of the pandemic. - The Conference Board Leading Economic Index (LEI) for the U.S. increased by 1.6% in April to 113.3, following a 1.3% increase in March. The Conference Board said, in part, “With April’s large monthly gain to start the second quarter, the U.S. LEI has now recovered fully from its COVID-19 contraction—surpassing the index’s previous peak. … The Conference Board now forecasts real GDP could grow around 8 to 9 percent (annualized) in the second quarter, with year-over-year economic growth reaching 6.4 percent for 2021.” Not all economic news has been positive or above expectations - The latest reading from the Chicago Fed National Activity Index, which tracks 85 indicators of economic activity, showed the economy was growing above trend, but weakened significantly from March’s big rebound. Said Trading Economics , “The Index fell to 0.24 in April of 2021 from an 8-month high of 1.71 in March, suggesting a slowdown in economic growth.” March’s strong reading followed a negative reading in February, the first down month in almost a year. - And recent consumer sentiment measures from both the University of Michigan and The Conference Board both showed some signs of relative weakening compared to the prior period. - According to Reuters , “U.S. consumer sentiment unexpectedly dropped in early May as inflation worries sapped confidence in what had been a rapidly brightening economic outlook. … The University of Michigan’s Consumer Sentiment Index fell 5.5 points to a reading of 82.8, pulling back from the highest level in roughly a year in April.” - Bespoke Investment Group noted over the weekend that “Relative to expectations, recent economic data has certainly been slowing down as the Citi Economic Surprise index sits just above zero.” This index is a measure of how much economic releases are beating or missing forecasts. According to Barron’s , the index has fallen “from its highest level on record to about flat, a sign that expectations were too low and are now too high.” Overall outlook: Far more good than bad It would seem that for the trend in economic data overall, it is less a case of “two steps forward and one step back” than it is of several giant leaps forward and then some intermittent periods of slightly missing on highly optimistic expectations. As for the U.S. equity markets, which hover near record highs, bearish analysts can find plenty of worry points: inflation fears, the possibility of the Fed beginning to taper bond purchases, generally stretched valuations, the rapidly growing deficit, and whether or not earnings growth for U.S. companies will continue its extraordinary strength in 2022. However, the glass appears to be more than half full over the intermediate term, as far as economic data goes. Whether that translates to a continued market trend higher is another question altogether. It is encouraging, at least for now, that “good news” is being treated as “good” by the markets. The challenges of “The Second Pandemic” I want to mention another important aspect of the nation’s recovery from the unprecedented impact of COVID. May was Mental Health Awareness Month , a designation first established in 1949. Nothing perhaps could be more appropriate as the pandemic’s most dangerous and lengthy period is hopefully winding down. But there will be a lasting impact for many, whether it is financial, emotional, physical, or otherwise. Many in the media and health care have called this “The Second Pandemic.” The organization Mental Health America wrote, “It’s no secret that many people struggled with mental health challenges this last year. What was already a growing crisis has been exacerbated by lockdowns, isolation, intensified stressors and anxieties, and political and societal turmoil, especially for families. As we slowly transition to more ‘normal times,’ very few things may be ‘normal’ as we know it. Families will be looking for ways to cope and move forward.” To paraphrase one radio commentator last week, it is as though we are entering a period similar to a community that was hit by a severe tornado in the dead of night. The damage can only start to be truly known in the bright light of day. He had some heartfelt advice in his wrap-up that I think we can all embrace: “If you are personally having difficulties, reach out to someone for help. If you know someone who is struggling, reach out to them. What we need most of all is to reestablish a sense of community and mutual support.” *** I hope you and your family had an enjoyable and safe holiday weekend. Our sincere thanks and thoughts go out to all those who were being remembered and honored on Memorial Day.