3. One of these key parameters is the equity market risk premium used to estimate the equity financing cost for discounted cash flow analysis. Currently, you are using a shared account. At the same time, the labor market is absorbing workers who have lost employment. Based on the analysis conducted, we recommend to use an equity market risk premium of 6.0% as per 30 June 2016. The 5.5% ERP recommendation is to be used with a normalized risk-free rate of 2.5%, implying a "base" U.S. cost of equity capital estimate of 8.0% (2.5% + 5.5%). These reviews warrant a periodic reassessment of the equity risk premium (ERP) and the accompanying risk-free rate and key inputs used to calculate the cost of equity capital in the context of the Capital Asset Pricing Model (CAPM) and other models used to develop discount rates. This statistic is not included in your account. In this case, the cash flow is formulated as dependent on the capital structure and the tax advantage from the debt is considered in the total cash flow instead of in the cost of capital (WACC). This paper provides evidence on the degree of persistence of one of the key components of the CAPM, namely the market risk premium, as well as its volatility. You only have access to basic statistics. Currently, you are using a shared account. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. Creating value whilst not losing sight of concrete opportunities and the financial risks, Creating values through a merger and/or acquisition. The Cost of Capital Navigator is an interactive, web-based platform (subscription required) that guides finance professionals through the steps of computing cost of capital taking into account best practices and the latest theory on this topic. 2 .Source: U.S. Bureau of Economic Analysis (BEA). 7Assumes a market beta of 1.0. KPMG in the US. To combat inflation, monetary policy has been shown to take over three or even four years. The average required return on equity used for the U.S. is 7.3%, according to "Market Risk Premium and Risk-Free Rate Used for 88 Countries in 2021," the latest research from Pablo Fernandez, Sofia Bauls, and Pablo Fernandez Acin. This is because the robust job market is contributing to high inflation numbers. Average market risk premium in the United States from 2011 to 2022 [Graph]. For the optimists, the good news is that the double-digit inflation that characterized nearly half the world in 2022 is expected to be less prevalent this year. Importantly, even countries headquartered in mature markets have international risks if they carry out operations in other countries. We advise financial institutions on all aspects of traded and non-traded market risk. In contrast, the Total Cash Flow WACC does not account for the tax shield. Social Science Research Network. Kroll's team of internationally recognized transfer pricing advisors provide the technical expertise and industry experience necessary to ensure understandable, implementable and supportable results. Based on KPMG Nederland Corporate Finance analysis, the equity market risk premium decreases to 5.75% as per 31 December 2022. . This is the fourth edition of our comparison between IFRS and Dutch GAAP. Organizations of all sizes are ever more exposed to new trends in tax regulation, not just locally but globally. 0000001580 00000 n In the above infographic, we look to answer that question using the World Economic Outlook report by the International Monetary Fund (IMF). You can only download this statistic as a Premium user. When companies require an objective and independent assessment of value, they look to Kroll. %]&8e MZ])<9Ed;IC+8:{8Zm5%aUM`L=#G=*1|-}#-owe`I"$/SFCj*jbj&pIpnEG.W*|CmgkZ*iCS#P0wW1_ngnIv!wO}CW % YX]BHK##BlXV'6e3(TZ52A)K\x'+gK The App includes documentation for all of these sources. Kroll is not affiliated with Kroll Bond Rating Agency, The accompanying audited consolidated financial statements, related note disclosures, and other financial information contained in the management's discussion and analysis of Ne ", Social Science Research Network, Average market risk premium in the United States from 2011 to 2022 Statista, https://www.statista.com/statistics/664840/average-market-risk-premium-usa/ (last visited March 05, 2023), Average market risk premium in the United States from 2011 to 2022 [Graph], Social Science Research Network, May 23, 2022. Exhibit 1: Factors Considered in the U.S. ERP Recommendation: Relative Change from March to November 2020. This statistic is not included in your account. 656 0 obj <>/Encrypt 646 0 R/Filter/FlateDecode/ID[]/Index[645 21]/Info 644 0 R/Length 69/Prev 626475/Root 647 0 R/Size 666/Type/XRef/W[1 2 1]>>stream to incorporate the statistic into your presentation at any time. Neel is a passionate and motivated individual currently working at KPMG while also pursuing his CPA certification. Use Ask Statista Research Service, finance and economics professors, analysts and managers, According to the source, the report is presenting required market risk premium (or equity premium) defined as: "incremental return of a diversified portfolio (the market) over the risk-free rate required by an investor. xref What makes up core inflation exactly? About 11% of them managed mainly equities, 7% . Our privacy policy describes how your data will be processed. Please try again later! To guarantee full flexibility in setting parameters and calculations, users can access the data calculated by KPMG at any time or incorporate their own values into the cost of capital derivation. Exhibit 1 lists the primary factors that were considered when arriving at the Duff & Phelps Recommended U.S. ERP, effective December 9, 2020. Learn more about KPMG US Services. All rights reserved. Duff & Phelps continuously monitors global economic and financial market conditions that may indicate a change in the indicated ERP and will update our guidance as frequently as warranted. The replacement of London Inter-Bank Offered Rate (LIBOR) is a multiyear transformation, and the impact will be a seismic shift in core operations, vendor relationships and loan products. With easy access to capital, low interest rates, and a recovering global economy, deal makers around the world announced $5.1 trillion worth of M&A transactions in 2021, up from $3.8 trillion in 2020 and the highest level since 2015 1. Kroll OnTrack Inc. or their affiliated businesses. Market Risk Premia Market Risk Premia Application example Market Risk Premia of international stock markets as of 31 January 2023 0.834 0.834 10.309 10.309 Austria Australia Belgium Brazil Canada Swiss China Germany Denmark Estland Spain Finnland France United Kingdom Greece Hongkong Indonesia India Italy Japan South Korea Mexico Malaysia Statista. The Equity Risk Premium (ERP) is a key input used to calculate the cost of capital within the context of the Capital Asset Pricing Model (CAPM) and other models. One marker is the Conference Boards Leading Economic Index, which fell for its tenth straight month in December. In this Markets in a Minute from New York Life Investments, we explore equity risk premiums for countries around the world. Get our latest research and insights in your inbox. The Equity Risk Premium (ERP) is a key input used to calculate the cost of capital within the context of the Capital Asset Pricing Model (CAPM) and other models. The price of risk is what investors demand as a premium, an extra return over and above what they can make on a guaranteed investment (risk free), to invest in a risky asset . 55 East 52nd Street 17 Fl The KPMG Valuation Data Source does not select the appropriate settings for you, but provides extensive documentation about the different beta types which will facilitate your decision. Summary of our observations of the key factors influencing the equity market risk premium. Financial market overview of the Middle East, Facebook: quarterly number of MAU (monthly active users) worldwide 2008-2022, Quarterly smartphone market share worldwide by vendor 2009-2022, Number of apps available in leading app stores Q3 2022, Profit from additional features with an Employee Account. This research bulletin prepared by the Dutch Valuations practice summarises our observations regarding the key factors influencing the equity market risk premium since the onset of the financial crisis. However, they may also provide investors with higher returns than can be expected in mature markets. So far, this year is no different. Here are the countries with the highest forecasted inflation rates in 2023. Yet despite recent rate increases, the impact has yet to prompt major waves in unemployment. Discover more about S&P Globals offerings, S&P U.S. Equity Risk Premium Index (USD) Factsheet, Direxion Daily S&P Biotech Bear 3X Shares. hbbd``b`o d; $:@@+5LL S % This Markets in a Minute Chart is available as a poster. A confirmation email has been sent to you. Read more. This suggests that investors demand a slightly lower return for investments in that country, in. 8(>M1O^?(d:TF1eSL-x8!v[z Bt.OK;,(Q=l~BZ6j}Og.#m!/E)O*0yYOTlrjLdx j$C ^@=T@/SzR;n(oU\a\B3t4jc6rAb3^&^. Market risk premium, often referred to as equity, risk, or market premium is calculated as the difference between the expected return on a market portfolio and the risk-free . U.S. real GDP decreased an estimated 3.5% in 2020 (compared to an increase of 2.2% in 2019). Our privacy policy describes how your data will be processed. Thirty-four percent of them had more than 100 funds within the fund group, and 22% had less than 15 funds. Average market risk premium in selected countries worldwide in 2022 [Graph]. As investors closely watch economic data, rising unemployment could come on the heels of higher interest rates, but so far this has yet to unravel. ", Social Science Research Network, Average market risk premium in selected countries worldwide in 2022 Statista, https://www.statista.com/statistics/664734/average-market-risk-premium-selected-countries/ (last visited March 05, 2023), Average market risk premium in selected countries worldwide in 2022 [Graph], Social Science Research Network, May 23, 2022. A paid subscription is required for full access. Thank you! Venezuela, Sudan, and Yemen are tied for the highest equity risk premium. He . In these uncertain times, where geopolitical issues rapidly ensue, ESG is more relevant. The Free Cash Flow WACC is composed of the weighted return expectations of all the investors (equity and debt investors) and the tax correction term (tax shield). Show publisher information 0000000016 00000 n You need a Statista Account for unlimited access. Of course, the pandemic recovery has impacted these figures. Even as the tech sector reports mass layoffs, unemployment claims in the U.S. fall below recent averages. Limited, a private English company limited by guarantee. However, this is a simplified approach and does not account for the fact that a companys operations may extend into other markets. The tool provides access to cost of capital parameters from more than 150 countries and peer group-specific data from over 13,500 companies worldwide. One method is to assume that all companies incorporated in a country have equal exposure to that countrys risk. "Average Market Risk Premium in Selected Countries Worldwide in 2022. In addition to access to the tool, we provide you with a personal advisor as your direct contact,who will conduct the cost of capital derivation for you according to your specifications. A total of 313,973 home-equity lines of credit (HELOCs) were originated on residential properties in the fourth quarter of 2022. Corporate income tax rates are based on the KPMG tax survey. Thank you! Brian Morrissey, Head of Insurance, and our insurance team have compiled a collection of KPMG's latest publications and articles which focus on developments in, and issues facing the insurance industry. Kroll is a leading provider of goodwill, intangible and long-lived asset impairment testing. FV survey participants included small, midsize, and large fund groups. The interactive dashboard is updated monthly and can be accessed anywhere and anytime. New York NY 10055. Leading financial centers in the Middle East and Africa 2020, Distribution of global Islamic banking assets 2021, by country, Distribution of sovereign sukuk issuance globally 2021, by country. With the KPMG Valuation Data Source, you can calculate both types of WACC. Besides access to the tool and a personal contact, we provide you with individual parameter derivations, background research and statistical assessment of the data. hSkh[d711FMG) --%b#VRIEbVm-5" Duff & Phelps regularly reviews fluctuations in global economic and financial conditions that warrant periodic reassessments of ERP. Some analysts suggest that despite a bleaker economic outlook, companies are hesitant to conduct layoffs. Sign up to receive periodic news, reports, and invitations from Kroll. Participants representing 89 registered investment company fund groups completed it. Attitudes to tax are changing. The premiums are based on a study by a New York University researcher, Aswath Damodaran. 3.53% credit spread x 1.25 relative equity market volatility. All rights reserved. Date Written: March 23, 2022 Abstract The equity risk premium is the price of risk in equity markets, and it is not just a key input in estimating costs of equity and capital in both corporate finance and valuation, but it is also a key metric in assessing the overall market. The Equity Risk Premium (ERP) is a key input used to calculate the cost of equity capital within the context of the Capital Asset Pricing Model (CAPM) and other models. As a Premium user you get access to the detailed source references and background information about this statistic. "Average Market Risk Premium in The United States from 2011 to 2022. Chart. If you are an admin, please authenticate by logging in again. According to the source, the report is presenting required market risk premium (or equity premium) defined as: "incremental return of a diversified portfolio (the market) over the risk-free rate required by an investor." You can only download this statistic as a Premium user. The inflation differential is calculated by us, based on inflation estimates provided by Economist Intelligence Unit. <> To account for the additional risk stocks carry over bonds, multiply the credit spread by the relative equity market volatility. Goldman Sachs & Co. Dec 2008 - May 20112 years 6 months. The research and data preparation for deriving the cost of capital does not have to be a tedious process. 0000002063 00000 n All the benefits at a glance WACC at the click of a button Available: https://www.statista.com/statistics/664734/average-market-risk-premium-selected-countries/, Average market risk premium in selected countries worldwide in 2022, Available to download in PNG, PDF, XLS format, Value of traded shares in the Middle East July 2020 by exchange, Value share of outstanding bonds by GCC country 2021, Users of various mobile payment apps in Saudi Arabia in 2020, with forecasts to 2025, Share of online financial services usage Saudi Arabia 2022, Distribution of bank liabilities in Saudi Arabia by type Q3 2022, Most popular in-store payment methods in Saudi Arabia 2020-2021, Annual number of credit card transactions in Saudi Arabia 2013-2021, per capita, Industry revenue of activities auxiliary to financial service & insurance activities in Saudi Arabia 2012-2024, Industry revenue of financial and insurance activities in Saudi Arabia 2012-2024, Industry revenue of financial service activities, except insurance & pension funding in Saudi Arabia 2012-2024, Value of outstanding bonds by GCC country 2021, Number of listed companies largest stock exchange operators globally 2022, Distribution of Islamic financial asset value worldwide in 2021, by country, Value of takaful assets worldwide 2012-2021, Distribution of global Islamic fund assets 2021, by domicile, Average market risk premium in Italy 2011-2018, Average market risk premium in the Netherlands 2011-2016, Average risk free investment rate in Belgium 2015-2022, Average risk free investment rate in the Netherlands 2015-2022, Average risk free rate in Italy 2015-2018, Average market risk premium in Mexico 2011-2016, Median market risk premium in selected countries worldwide 2022, Average market risk premium in Australia 2011-2016, Average required return to equity in Hungary 2015-2022, Average market risk premium in New Zealand 2011-2016, Average required return to equity in Turkey 2015-2022, Average required return to equity in Greece 2015-2022, Average market risk premium in Japan 2011-2016, Average required return to equity in the Netherlands 2015-2022, Average market risk premium in Canada 2011-2022, Average market risk premium in Brazil 2011-2016, Average market risk premium in the U.S. 2011-2022, Reasons for investment trust purchase in Japan 2022, Number of regulated open-end funds worldwide 2020-2022, by asset type, Find your information in our database containing over 20,000 reports. The index measures the spread of returns of U.S. stocks over long term government bonds. Profit from the additional features of your individual account. Please try again later. Kroll Recommended U.S. Equity Risk Premium and Corresponding Risk-Free Rates to be Used in Computing Cost of Capital: January 2008 - Present, /en/insights/publications/cost-of-capital/recommended-us-equity-risk-premium-and-corresponding-risk-free-rates, /-/media/assets/images/news/featured-images/2020/mifid-ii-regime-challenges-new.jpg?extension=webp, Impact of High Inflation and Market Volatility on Cost of Capital Assumptions, Effective October 18, 2022. Available: https://www.statista.com/statistics/664840/average-market-risk-premium-usa/, Average market risk premium in the United States from 2011 to 2022, Available to download in PNG, PDF, XLS format, Value of traded shares in the Middle East July 2020 by exchange, Value share of outstanding bonds by GCC country 2021, Users of various mobile payment apps in Saudi Arabia in 2020, with forecasts to 2025, Share of online financial services usage Saudi Arabia 2022, Distribution of bank liabilities in Saudi Arabia by type Q3 2022, Most popular in-store payment methods in Saudi Arabia 2020-2021, Annual number of credit card transactions in Saudi Arabia 2013-2021, per capita, Industry revenue of activities auxiliary to financial service & insurance activities in Saudi Arabia 2012-2024, Industry revenue of financial and insurance activities in Saudi Arabia 2012-2024, Industry revenue of financial service activities, except insurance & pension funding in Saudi Arabia 2012-2024, Value of outstanding bonds by GCC country 2021, Number of listed companies largest stock exchange operators globally 2022, Distribution of Islamic financial asset value worldwide in 2021, by country, Value of takaful assets worldwide 2012-2021, Distribution of global Islamic fund assets 2021, by domicile, Average market risk premium in New Zealand 2011-2016, Average market risk premium in Australia 2011-2016, Average market risk premium in Mexico 2011-2016, Median market risk premium in selected countries worldwide 2022, Average market risk premium in Russia 2011-2022, Average market risk premium in Brazil 2011-2016, Average market risk premium in Canada 2011-2022, Average market risk premium in Japan 2011-2016, Average market risk premium in Italy 2011-2018, Average market risk premium in the Netherlands 2011-2016, Average market risk premium in selected countries worldwide 2022, Average risk free investment rate in Belgium 2015-2022, Average risk free investment rate in the Netherlands 2015-2022, Average risk free rate in Italy 2015-2018, Average required return to equity in the Netherlands 2015-2022, Average required return to equity in Turkey 2015-2022, Average required return to equity in Greece 2015-2022, Value of M&A deals in Russia 2020, by type and industry, Climate bonds issuance Philippines 2020, by issuer, Find your information in our database containing over 20,000 reports. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. Jersey City, NJ. It is followed by North Macedonia (15.0%) and Spain (12.7%). Please do not hesitate to contact me. 4.41% country risk premium + 5.23% mature market risk premium. The tool provides access to cost of capital parameters from more than 150 countries and peer group-specific data from over 13,500 companies worldwide. 0 Potential Reward Every country presents varying degrees of risk based on local conditions. %%EOF The equity risk premium is the additional return an investor expects for investing in the stock market to help compensate them for the extra risk it involves. 6Source: Centers for Disease Control and Prevention (CDC) website at: https://covid.cdc.gov/covid-data-tracker/#vaccinations Accessed March 05, 2023. https://www.statista.com/statistics/664840/average-market-risk-premium-usa/, Social Science Research Network. From the KPMG survey of corporate tax rates by country (until 2021 . Duff & Phelps (Rebranded as Kroll) has published its recommended U.S. ERP and corresponding risk-free rate since 2008. Based on that rating, determine the credit spread, which is the additional yield over a risk-free investment. margins or growth). Advisory works with the worlds leading organizations to create and protect the sustainable value of their business. "Average market risk premium in the United States from 2011 to 2022." If the spot yield-to-maturity on 20-year U.S. Treasuries were used instead, the ERP would have to be increased accordingly. Risk Vs. 55 East 52nd Street 17 Fl Direct WACC calculation and access to all relevant cost of capital parameters, Reliability and monthly updates of data ensured by KPMG experts, Option of selecting the cash flow currency, Summary and storage option of own peer group from more than 11,000 companies worldwide, Parameters available as Excel spreadsheet for download. Since the beginning of the financial crisis in 2008, executives and valuation practitioners alike have observed major changes in the underlying parameters that drive, and are used to derive, the value of companies. W.(?Q3|3sv J@?Erv=^FD8_r"m5%R tp@" zI c]j=3j.#DQK[rlEPF#=]Rs#cAGEZN9;Np)#s Get the latest KPMG thought leadership directly to your individual personalized dashboard. Also included are recent publications from the CBI, EIOPA, and other European bodies. When investors purchase stocks internationally, they are exposed to additional risks. As a Premium user you get access to the detailed source references and background information about this statistic. Peer group-specific and 70 (sub)sector-specific beta factors. <<33CED20E7EB1B2110A00C0DC1589FC7F>]/Prev 1115865/XRefStm 1580>> Valuation of businesses, assets and alternative investments for financial reporting, tax and other purposes. Unlike some declining economic indicators mentioned above, the job market is one of the strongest areas of the global economy. KPMG supports Whoppah in their growth strategy. These jobless rates are more than double the projections for advanced economies in Europe. Over the last two decades, unemployment has hovered around 20%. 2023 Kroll, LLC. A multi-skilled professional in financial/data analysis and modelling, financial risk management, auditing and accounting. (May 23, 2022). <>stream For example, a consumer products business may weigh exposure based on the location of their revenue. Statista. Business Solutions including all features. Are you interested in testing our business solutions? How can investors determine the equity risk premiums for individual companies? A paid subscription is required for full access. 0o*q1~*UkL. Please create an employee account to be able to mark statistics as favorites. 665 0 obj <>stream You only have access to basic statistics. To use individual functions (e.g., mark statistics as favourites, set Across many countries, the pandemic has made entrenched labor trends worse. 0000002019 00000 n G}R|K/Q Q84UUA.Zy/s#['L cw5(Jj5XGhcAi"7&-,?8[[. The typified, uniform risk-free rates are derived from yield curves based on regression parameters and results published by central banks (e.g., Deutsche Bundesbank, Bank of England, Federal Reserve). trailer Learn more about how Statista can support your business. 0000003233 00000 n This research bulletin prepared by the Dutch Valuations practice summarises our observations regarding the key factors influencing the equity market risk premium since the onset of the financial crisis. In exchange for taking on the additional risk, investors demand a higher return potential, known as an equity risk premium. On the low end of the scale, countries such as the United States, Singapore, and Germany have AAA credit ratings and the lowest premium of 5.23%. As these macroeconomic factors play out throughout 2023, each can have an effect on inflation. The ideal entry-level account for individual users. Find a countrys credit (bond) risk rating. h Accessed March 05, 2023. https://www.statista.com/statistics/664734/average-market-risk-premium-selected-countries/, Social Science Research Network. 0000002412 00000 n Fixing supply-side dynamics, such as preventing supply shortages and improving transportation systems and infrastructure could cool inflation. Following the 8.8% global inflation rate in 2022, the IMF forecasts a 6.6% rate for 2023 and 4.3% rate for 2024 based on their most recent January 2023 update. startxref You receive independent access to all of the tool's functions. That's what more than 350 U.S. business leaders told KPMG in a new year end M&A survey. In just a few steps, the solution guides the user through the derivation of the individual weighted average cost of capital (WACC) or the cost of equity relevant for the financial sector: the user simply specifies the preferred reporting date, the desired country, the currency, and the peer group and selects the desired settings. Download a tablesummarizing these recommendations over the period January 2008 present. That was down 16.2 percent from 374,703 in the prior quarter. A total of 108 companies came to market in London in 2021, more than 2020 (38) and 2019 (35) combined. 2023KPMG N.V., a Dutch limited liability company and member of the worldwide KPMG organization of independent companies affiliated to KPMG International Limited, a UK limited by guarantee company. Sources Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. The last section, and the special theme of this Managed the Asset Servicing Equities and Fixed Income Teams for the European, Canadian, Latin American and Middle . The market risk premium Frontier Economics 8. Historical recommendations: Kroll Increases U.S. Normalized Risk-Free Rate from 3.0% to 3.5%, but Spot 20-Year U.S. Treasury Yield Preferred When Higher, Kroll U.S. Normalized Risk-free Rate Increased from 2.5% to 3.0%, Effective April 7, 2022, Duff & Phelps Recommended U.S. Equity Risk Premium Decreased from 6.0% to 5.5%, Effective December 9, 2020, Duff & Phelps U.S. Normalized Risk-Free Rate Lowered from 3.0% to 2.5%, Effective June 30, 2020, Duff & Phelps Recommended U.S. Equity Risk Premium Increased from 5.0% to 6.0% Effective March 25, 2020, Duff & Phelps U.S. Equity Risk Premium Recommendation Decreases from 5.5% to 5.0%, Effective December 19, 2019, Duff & Phelps Decreases U.S. Normalized Risk-Free Rate from 3.5% to 3.0%, Effective September 30, 2019, Duff & Phelps Increases Recommended U.S. Equity Risk Premium from 5.0% to 5.5%, effective December 19, 2018, Duff & Phelps U.S. Equity Risk Premium Recommendation Decreases from 5.5% to 5.0%, Effective September 5, 2017, Duff & Phelps Decreases U.S. Normalized Risk-Free Rate from 4.0% to 3.5%, Effective November 15, 2016, Duff & Phelps Increases Recommended U.S. Equity Risk Premium from 5.0% to 5.5%, Effective January 31, 2016, Brexit: The Impact on Cost of Capital (September 14, 2016), Duff & Phelps Decreases U.S. Equity Risk Premium Recommendation to 5.0%, Effective February 28, 2013, Duff & Phelps Decreased Its Recommended U.S. Equity Risk Premium to 5.5% Effective January 15, 2012. You need a Statista Account for unlimited access. Kroll regularly reviews fluctuations in global economic and financial market conditions that warrant a periodic reassessment of the ERP and the accompanying risk-free rate. U.S. real GDP collapsed 5% and 31.4% in the first and second quarters of 2020, respectively, but it grew in real terms by an annualized 33.1% in the third quarter.1,2 In the fourth quarter, U.S. equity markets reached new all-time highs, spurred by optimism about the new COVID-19 vaccines, the expectation of continued low interest rates through at least 2023, the resolution of the U.S. presidential election, and improved business confidence.