State of the Economy and Markets

Quarter 3, 2021

Eighteen months have passed since the World Health Organization declared a global pandemic due to the outbreak of COVID-19. The path of the economy continues to be affected by risks associated with the pandemic. Increasing progress on vaccinations and strong fiscal stimulus efforts have led to a gradual return to normalcy and a strengthening of the economy.

Here locally, the 40-day summer meet at the Saratoga Race Course had a paid attendance of more than 1 million for the sixth consecutive year (excluding 2020, when fans were not permitted) and established a new record for all-sources handle, exceeding $800 million. Our businesses continue to be resilient, working with limited resources, but still offering the customer experience that has made Saratoga Springs an evergreen travel destination.

Despite concerns of new coronavirus variants, rising inflation, proposed tax changes and a potential government shutdown, the broader stock markets have increased markedly. The S&P 500 Index is up 20 percent year-to-date and nearly 38 percent over the past 12 months.

Most recently, concerns coming out of China caused some nervousness among investors. As one of its major real estate companies heads toward default, some question the ripple effect it might have globally. However, it appears now, neither this, nor an economic slowdown in China, will be of any great significance to the U.S. economy.

At its most recent meeting, the Federal Open Market Committee (FOMC) announced that if economic progress continues, it is likely to reduce quantitative easing, perhaps even before year-end. However, the Fed was clear that we should not expect any interest rate hikes until quantitative easing has ended (projected to be mid-2022) and that, even then, it is far from certain.

As we head into the fourth quarter, and even into early 2022, all eyes will continue to be focused on the potential headwinds mentioned previously. At this point, it is too early to tell which, if any, will have a meaningful impact on the economy and the broader stock markets. What we do know is that we have been faced with challenges like these before, some even more recently than others, and that we have come out of them stronger and better prepared for what lies ahead.

As always, your relationship team is here to meet with you, and we are very much looking forward to seeing those of you we may not have seen in-person for quite some time. We value your relationship and the confidence you have placed in Adirondack Wealth Management by choosing us as your financial partner.

Sincerely,

Michael Brodt
Senior Vice President
Wealth Management Director