Most Important Number of the Week Is 4.9%

As weeks go, this past one could hardly have gone better for the economy. From retail sales to industrial production and the number of homes sold, any data point of consequence easily topped estimates. This was no fluke; Bloomberg’s monthly survey of economists’ forecasts showed that the economy is expected to expand 4.9% this year, which would be the most since Ronald Reagan occupied the White House in 1984. It has sparked talk of another “Roaring ’20s” era. Some esteemed Wall Street firms such as Goldman Sachs Group Inc. say the rate of growth is likely to be even higher — more than 6%.

And yet the stock and corporate debt markets struggled, with the S&P 500 Index dipping 0.71% for the week and the Bloomberg Barclays U.S. Corporate High Yield Bond Index failing to advance. This also was no fluke. Although the performance of equities and other riskier assets tends to track the strength or weakness of the economy over the long term, the two often diverge wildly in the short term — as they did last year. So despite what by all indications will likely be the strongest economic growth in almost 40 years, it should be no surprise if 2021 is not all that good to investors.