Where Our Economy Is One Year After Life Changed, According to Experts
The coronavirus pandemic has impacted pretty much every aspect of the economy including the GDP, unemployment, household spending, real estate and the stock market. As we reach the year-mark of living with the pandemic, GOBankingRates asked experts to weigh in on how they feel about the current economy compared to where we were this time last year.
US Employment Is Showing Signs of Recovery
“Ultimately, I think we are already in a good spot for economic growth and recovery,” said Ian Persaud, an advisor with Equitable Advisors. “In April 2020, unemployment rates were even higher than the rates of the Great Recession. The unemployment rate in April 2020 was approximately 14.8% and dropped down to 6.7% in December 2020. Continuing the trend, unemployment dropped another 0.4% in January, and is now at 6.3%.”
…But It Still Has a Ways To Go To Reach Pre-Pandemic Levels
“We’ve made up a lot of lost ground since the economy’s freefall early last spring. However, we’re still short of where we were before the pandemic hit, particularly in the job market,” said Gary Schlossberg, global strategist at the Wells Fargo Investment Institute. “While we expect to exceed the peak in GDP output reached during the fourth quarter of 2019 by the second quarter of this year, we’re still nearly 10 million jobs short of where we were at the peak in the job market in February 2020.”
Schlossberg notes that job recovery will take longer for certain sectors than others.
“Much like in a normal recession, there have been winners and losers,” he said. “Hit hardest have been labor-intensive services industries, particularly entertainment, travel, dining out and retailing. Social media, online shopping and the tech industry have been the big winners.”
2021 Will Be a Good Year for the Stock Market
“Even with interest rates going up slightly at the end of February, which caused an initial drop in the stock market, equities bounced back very strong a couple of days after,” Persaud said. “The S&P year-to-date is up about 2.5%, and the I believe interest rates will still remain relatively low for quite a while. I do believe that the 2021 year will produce a positive return in the stock market.”
Timely Vaccine Distribution Will Get Us Back on Track
“I am optimistic about our ability to get in front of the pandemic and return to some semblance of normality out beyond 2021,” Schlossberg said. “Most impressive has been our ability to collapse the timeframe for development of a vaccine, using new technologies applicable to the fight against an array of other diseases.”
With a timeline for a vaccine rollout, we are in a much better place than we were this time last year, Schlossberg said.
“There’s considerably less uncertainty about the economic outlook now compared to a year or even to six months ago,” he said. “If there was a game-changing event, it was news of highly effective vaccine results announced in early November. That provided us with a timeline, or trajectory for a return to some form of normality. In doing so, it places us in a very good spot for a recovery during the balance of the year featuring the strongest economic growth in the last 35 years.”
Overall, Economic Growth Will Be ‘Robust’ in 2021
“Economic growth in 2021 should be quite robust, given the massive stimulus packages and still-low interest rates,” said Craig Birk, chief investment officer at Personal Capital. “This assumes vaccines prove as effective as anticipated. While jobless rates are high, many have been saving at high rates and are likely to want to spend when the world opens up. Pent up demand for housing and moderate energy prices are also supportive.”
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