The economy bounced back from the depths of the COVID-19 shutdown last year, but it’s not all the way back yet and how long it takes to return to normalcy — whatever that might be post-pandemic — is a big question mark for 2021.
With vaccines now approved and going into the arms of those who need them most, the hope is that the general trend will get better.
But there are still big parts of the economy that are struggling — from local governments starved of tax dollars to landlords looking for back rent and people lining up for food banks.
Consumer spending powers two-thirds of the economy and will be necessary for a complete recovery.
Just before Christmas, The Conference Board said its closely watched Consumer Confidence Index declined to 88.6 for December, down from 92.9 in November, which also marked a decrease in sentiment for the U.S.
“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence,” said Lynn Franco, senior director of economic indicators at The Conference Board. “As a result, consumers’ vacation intentions, which had notably improved in October, have retreated. On the flip side, as consumers continue to hunker down at home, intentions to purchase appliances have risen. Overall it appears that growth has weakened further in [the fourth quarter], and consumers do not foresee the economy gaining any significant momentum in early 2021.”
The outlook could change later in the year as the world opens back up, at least paving the way for more trips to the mall, eating out and travel abroad.
Forecasting firm IHS Markit said that, after the deepest recession in 74 years in 2020, the global economy would rebound this year.
“The rapid deployment of effective vaccines and reopening of economies should gradually unleash a new wave of spending on travel and services, driving robust growth in the later part of 2021,” said Sara Johnson, executive director of global economics at IHS. “After a 4.0 percent decline in 2020, the global economy is expected to expand 4.5 percent next year, with global output expected to reach a new peak.”
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