Marshall Commentary

We understand that financial planning isn’t always top of mind – but it is for us! Each month we publish a commentary to update you on the latest financial trends and changes.

Wealth IQ – October 2021

by Adam Reinert, George Evans II, & Sean Dann | October 28, 2021 | Commentary

Marshall Wealth IQ is aimed at sharing insightful financial market and economic data in easy to visualize charts with brief analyses. This commentary isn’t designed as a call to investment action, but rather as a dependable source to help you feel better informed about current events in today’s market and the underlying trends impacting current wealth.

Let’s get started:

1) Inflation continues to be a topic of great public interest. It seems hardly a day passes where we don’t hear about inflationary pressures on some level – be it a large increase in social security benefits or how the coming holidays may be impacted by delays at ports. Unfortunately, for consumers and businesses, pricing relief likely won’t occur until later next year.


Source: Google Trends, U.S. Bureau of Labor Statistics

2) A confluence of factors has helped create ideal conditions for sharply rising prices. While the common narrative points to COVID disruptions as the main culprit, the story begins before COVID entered our lexicon. During the summer of 2019, retail inventories peaked as businesses, and capital markets, grew leery of the near-term outlook for economic growth.

Source: Google Trends, YCharts

3)  Economists use the inventory to sales ratio as a way to measure inventory levels. During the early days of the pandemic, retail sales plunged and the amount of inventory businesses had on hand relative to sales increased sharply. Businesses began shedding inventory just as a resurgent consumer emerged during the spring/summer of 2020. As a result, businesses had, and continue to have, low inventory available to meet demand. This is why you may have noticed limited product availability or long order/delivery times over the past year.  

4) Necessary fiscal and monetary action by policymakers and central bankers provided the support needed to prevent a long, protracted economic contraction. As a result, economic output began to recover after concerned, but increasingly confident consumers and businesses, flush with cash from increased savings and stimulus initiatives began to spend after months of deferred spending.

Source: Bloomberg

5) What consumers have opted to purchase has also had a major impact on inventories and supply chains. For the most part, consumers have spent heavily on tangible items, such as cars and appliances. Over the past year, the level of consumption for these durable goods has been significantly above longer-term trend (dotted line).

Source: Bloomberg

6) Conversely, the consumption of services has recovered from its pandemic lows, but rests only slightly above longer-term trend (dotted line). This is a sharp contrast to the durable goods charts above. 

7) The sudden demand for tangible goods has reverberated throughout global supply chains, resulting in low inventory of components like microchips and other distribution bottlenecks. Distribution challenges have been years in the making. The number of workers employed as Marine Cargo Handlers, those responsible for handling cargo from and to vessels, has been stagnant for years and remains below peak employment levels…  

Source: YCharts

The reduction of employed handlers comes at a time where container volume at U.S. ports has risen more than 29% over the past year. Unfortunately, once cargo is unloaded it’s met with additional logistical challenges as the number of persons employed in the transportation and warehousing sector remains below 2019 levels.

8) So where do we go from here; are we truly living in extraordinary times? To start, while the recent bout of inflation seems remarkable, it’s actually following a fairly normal pattern given supply-side constraints. As indicated in the chart below, as new order backlogs increase (green line, right axis), prices paid also increase (blue line, left axis). As these pressures moderate, so do prices.

One reason today’s cost pressures may ultimately prove to be temporary is there still appears to be slack in the economy. Both capacity utilization (the percentage of an organization’s potential output actually being realized) and labor force participation (the number of workers/workers actively seeking employment relative to working age population) both remain below pre-pandemic levels.

Lastly, if history is any guide, consumers should expect to see above-average inflation well into 2022 before price pressures begin to ease. We experienced similar inflationary pressures in the years following the Great Recession before inventory imbalances (orange line, far axis) were resolved and inflationary pressures (purple line, near axis) moderated.

9) On the interest rate front, traders’ expectations of a rate hike continue to be pulled further forward into 2022. There is now a 60% probability, based on Fed Funds futures prices, that the first interest rate hike will occur in June 2022. In August, the highest probability was for the first rate increase to occur in November/December 2022. The Federal Reserve will begin to taper asset purchases in 2021.


10) The 3rd Quarter of 2021 was a peculiar one for investor portfolios. Markets enjoyed broad based gains early in the quarter, but volatility arrived in September as markets were more easily able to assess the economic impact of several factors, including those resulting from the Delta variant during the quarter.  While early, financial markets have modestly recovered as COVID tensions once again ease and a rebound in economic activity is forecasted during the 4th Quarter.

Q3 2021 Market Performance

It’s impossible for anyone to know with certainty what will happen today, tomorrow, or even a minute from now. Investment involves risk and volatility; it’s why long-term investors have historically been rewarded with excess returns relative to cash. Our investment department monitors market data and works with our wealth advisory teams to right-size portfolios should something change relative to long-term trends. In the meantime, we’ll continue to share financial and economic data we believe is insightful and relevant to your wealth to help you feel informed.


Thank you for reading; please be well and stay healthy. 

Adam Reinert, CFA, CFP®

Chief Investment Officer

George Evans II, MBA

Chief Investment Strategist 

Sean Dann

Research Analyst

Disclosure: Marshall Financial Group, Inc (“Marshall Financial”) is an SEC-registered investment adviser with its principal place of business in Doylestown, Pennsylvania.   This newsletter is limited to the dissemination of general information pertaining to Marshall Financial Group’s investment advisory services.  Investing involves risk, including risk of loss.

This newsletter contains certain forward‐looking statements (which may be signaled by words such as “believe,” “expect” or “anticipate”) which indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward‐looking statements. As such, there is no guarantee that the views and opinions expressed in this letter will come to pass.

For additional information about Marshall Financial, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure web site (  Please read the disclosure statement carefully.