Cautious Optimism for the U.S. Economy and
Financial Markets

Abstract

Vanguard’s outlook for the U.S. economy remains one of cautious optimism. While Vanguard fully appreciates the secular headwinds following the deep financial crisis, their proprietary leading indicators continue to suggest that a stronger-than-expected economic recovery is increasingly likely in 2011. These upside risks—should they be realized—would appear consistent with a self-sustaining recovery, positive but volatile stock market returns, and eventually, stronger upward pressure on trend inflation and U.S. interest rates.