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U.S. GDP rose at an annualized 6.4% rate in the first quarter of 2021, the Commerce Department reported this week, to an inflation adjusted annualized $19.1 trillion.

The value of all domestically produced goods and services has almost recovered to the pre-pandemic high recorded by the fourth quarter of 2019 of an inflation adjusted annualized $19.3 trillion.

The good news, of course, in that is that the U.S. economy has just about recovered all the ground lost to the pandemic recession.

The odd news is that the U.S. stock market has raced well ahead of that economic recovery. The Standard and Poor’s 500 is up 29.3% from the end of 2019 to the close on April 29.

In other words the stock market is saying that essentially the same level of economic activity as at the end of 2019 is worth almost 30% more today.

You could note that the stock market is an anticipatory device and that what this stock price versus GDP gap is showing is that the market thinks the economy going forward will grow at a faster rate than was expected at the end of 2019.

Could be.

Could be that we’re about to see a pickup in productivity. Growth in U.S. productivity had been in something of a slump before the pandemic. No one is quite sure why–which means, of course, that we could get an equally unexplained uptick in productivity.

Could be that the market now believes that the Federal Reserve will hold interest rates lower for longer than it believed at the end of 2019.

Could be that the market is anticipating that a good part of the Biden administration’s jobs and families spending program will pass Congress and that it will lead to a long-lasting bump higher in economic growth.

Could be that we’re about to see one of those periodic, and essentially unpredictable, spurts in innovation and that a flood of new products will excite economic growth.

Could be, too, that a stock market where equities are at an all time high is overvalued.