Skip to content

Investment Commentary

Change is in the Air

By Eric Trousil | Johnson Financial Group • June 03, 2021

4 minute read time

One of things I will always associate with the transition from spring to summer is the return of the fresh aroma of blooming flowers. That may also mean a return to sneezing season for some of us, but nonetheless, it is a welcome change. We have a lilac tree outside the front door of our home that is now in full bloom, and the fresh scent has recently permeated the air. It is certainly that time of year.

For the past several months, we have been writing about the impact of transitioning from the COVID economy to a more “normal” environment. Economic data has been strong (as expected), and we expect that will continue throughout the year. However, current data suggests that key growth drivers may be shifting back to more normal sectors of the economy from those that got a COVID-boost.

The housing market has certainly experienced a V-shaped recovery. The Case-Shiller U.S. National Home Price Index was up roughly 13% over the past 12 months. Two indicators of housing market health – median days on the market, and number of homes listed – have been down significantly. The strong market eventually led to significantly inflated input prices and backlogged lead times for housing supplies. How long can this last? While the market is still strong by many measures, recent data points to the beginning of a turn. Lumber prices (spot and futures) have come down from their recent peaks. In addition, the University of Michigan’s “Good Time to Buy a House” index dropped significantly in the month of May. These data points could be an early indication that consumers are at a turning point, and the market is trending towards a return to more normal levels.


On the flip side, we’re seeing significant signs of improvement in other discretionary consumer spending. It is nice to see stadiums full of people again, and the data on department store foot traffic, travel, and gaming are all nearing pre-pandemic levels. The following chart illustrates just how closely air travel, as an example metric, follows the trends in the virus; essentially, improvements in virus numbers are followed shortly thereafter by increased traveler numbers.

2021-06-03 Investment-Commentary-Graph-02.png

The return to normalcy has increased pressures on the labor market, as noted in Brian Andrew’s commentary (Now Hiring!) about the impacts of the April employment report. We expect the May employment report, due out later this week, to be telling as well. One of the consistent themes we hear from business clients is they are struggling to recruit and hire. In fact, the level of current job openings and firms reporting they are unable to fill posted positions have both reached record highs, as shown in the following chart.


Several pandemic-related factors have contributed to the current labor shortage, including travel restrictions on seasonal immigrant workers, working parents with childcare responsibilities/restrictions, direct stimulus support payments to individuals, fears of catching the virus and many others. Given that backdrop, these labor issues will continue to have an outsize influence as the economy recovers, particularly on wage levels. And as a result, one of the biggest risk factors to watch during this recovery will be inflation. Will it be just “transitory” as the Fed suggests, or will inflation become a more intractable systemic issue? The story is one we will certainly continue to watch.

For now, please enjoy the fresh smell of the lilacs, a return to the stadium, and all the good things we get to enjoy during the summer.


Eric Trousil

Eric Trousil

SVP Wealth Portfolio Manager | Johnson Financial Group

As Senior Vice President, Wealth Portfolio Manager, Eric works with individuals and non-profit organizations to create customized investment solutions. With a strong emphasis on providing a personalized experience, Eric actively listens to each client’s unique needs to deliver the most relevant financial solutions.


This information is for educational and illustrative purposes only and should not be used or construed as financial advice, an offer to sell, a solicitation, an offer to buy or a recommendation for any security. Opinions expressed herein are as of the date of this report and do not necessarily represent the views of Johnson Financial Group and/or its affiliates. Johnson Financial Group and/or its affiliates may issue reports or have opinions that are inconsistent with this report. Johnson Financial Group and/or its affiliates do not warrant the accuracy or completeness of information contained herein. Such information is subject to change without notice and is not intended to influence your investment decisions. Johnson Financial Group and/or its affiliates do not provide legal or tax advice to clients. You should review your particular circumstances with your independent legal and tax advisors. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared. Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. Certain investments, like real estate, equity investments and fixed income securities, carry a certain degree of risk and may not be suitable for all investors. An investor could lose all or a substantial amount of his or her investment. Johnson Financial Group is the parent company of Johnson Bank and Johnson Wealth Inc. NOT FDIC INSURED * NO BANK GUARANTEE * MAY LOSE VALUE