Last year was an extended period of change and uncertainty due to COVID-19 and the economic effects that came along with the pandemic.
There's still a long way to go to get back to what most consider "normal," but 2021 has shown some early promise with vaccines being administered and a contested 2020 Presidential Election now behind us.
Sid Vaidya, US Wealth Chief Investment Strategist at TD Wealth, says there are five key factors that we should be aware of when it comes to the 2021 stock market and investing in general over the next 18 months.
1 – Global Economic Growth
The International Monetary Fund has now projected Global Domestic Product, or GDP as you've heard it used, to rebound to a "robust" 5.2% in 2021.
GDP is a comprehensive measure of economic activity and is the most popular indicator of overall economic health.
"This points to continued consumer demand and more normal conditions this year," Sid said.
2 – Continued Strong Fiscal Stimulus
Much like the stimulus checks sent out last year, Paycheck Protection Program (PPP) loans for small businesses and support from local banks for customers, Sid believes if there is continued fiscal policy support, it could boost the economy in numerous ways.
Additional stimulus could provide continued support, giving people the incentive to spend and put that money back into their local economies.
In addition to government support, central banks lowered interest rates and have committed to keeping rates low for an extended period of time.
3 – Corporate Rebound
"Corporate earnings in 2021 are expected to rebound more than 20%, which is key for sustainable, long-term economic growth," Sid said.
It all starts with jobs.
The more support corporations receive and profits they amass, the more these companies can hire employees and get unemployment numbers down.
Last year, the service industry took an incredible hit due to mandatory COVID-19 lockdowns, with millions filing for unemployment.
The healthier the economy, the more jobs we'll see in 2021 for those out of work.
4 – Government Policy Certainty
With the election behind us, things should begin to stabilize.
Markets don't like uncertainty and with the elections behind us, uncertainty about the outcome is no longer a factor driving market volatility.
This will be something to keep an eye on in 2021 and beyond.
5 – The COVID-19 Vaccine
Last but certainly not least is the vaccine.
"This is the real game-changer," Sid said. "The more effective the vaccine and the faster the deployment, the greater the potential for an economic rebound."
While it has started to be administered to frontline workers and those at the highest risk for the virus, the full rollout is still yet to come in future months.
In fact, Sid believes vaccine efficacy and the efficiency with which they are deployed are the biggest factors in the economic rebound.
"The anticipation that a significant percent of the population could be vaccinated by the summer should provide a huge relief to economies and the people in countries hit the hardest by the pandemic," Sid added.
To learn more, view the video here.