Recent economic data illustrates that conditions are improving, though serious risks remain. The primary driver of GDP over the next few quarters is likely to be the country's physical health, as the nation battles COVID-19. Right now, vaccines are on the way. The employment environment is in better shape than it was nine months ago, though still far from a position of strength (as it had been prior to the pandemic), and consumer confidence is improving. We expect that rising confidence will lead to continued growth in consumer spending. Auto sales have recovered, and the housing market remains strong, even as interest rates tick higher. Businesses are again expanding. Rolling all the data up, our GDP model now calls for a 1.6% increase in absolute GDP in 1Q21 from 4Q20, which translates to an annualized gain of 6.0%. We expect further absolute improvement into 2021. On an annual basis, we look for overall GDP growth of approximately 4.4% in 2021 and 3.6% in 2022. Our estimates are consistent with consensus forecasts and the outlook from the Federal Reserve, which calls for growth of 4%-6% in 2021.

President Joe Biden is preparing to announce an infrastructure-rebuilding plan that he estimates will create up to 10 million clean energy jobs. The following areas of the economy stand to benefit from the government spending, which could total as much as $4 trillion. The first element of the plan is improving the country's infrastructure, from roads and bridges to water systems and electricity grids.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.