Recent data show the current wave of virus infections weighing on the economy, with retail sales falling again in December and the labour market recovery stalling. We think fourth-quarter GDP growth slowed to 4.5% annualised, but the relatively softer end to 2020 will give way to stronger growth this year. The vaccine rollout has continued to ramp up, reaching 900,000 doses per day, which suggests President Joe Biden’s target of hitting 100m vaccinations within his first 100 days is within reach. The $900bn fiscal stimulus passed in December, and the likelihood that Biden will successfully push through even more support, will result in a renewed surge in personal incomes. Although current restrictions on activity are likely to remain in place for a couple of months yet, that is all laying the groundwork for a marked acceleration in consumption growth over the coming months.
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