Q4 2020 U.S. Macro Outlook: Pandemics and Politics

by Molly Cole | Feb 11, 2021

THE WINTER WILL BE CHALLENGING BUT THE OUTLOOK FOR 2021 IS PROMISING

  • The economy hit a soft patch during the end of 2020 as rampant COVID-19 spread—the spread was thrice the summer wave—caused economic conditions to deteriorate. Predictably, the hospitality sector was hardest hit as cold weather ruined the appetite for outdoor dining and many states implemented strict social distancing measures. Hospitality employment declined significantly in December, although most sectors expanded headcount, causing headline employment numbers to weaken only slightly. Subdued activity should continue during the winter months and the pace of first quarter growth should be just 1.3% per annum before averaging nearly 7% during the final three quarters of the year.
  • Positive tailwinds will support growth this year. Higher-paying occupations have generally withstood layoffs and these workers have substituted spending on services, like leisure travel, for consumer goods or have increased their savings rate to record levels. This suggests strong consumption ahead, which could expand by 5% this year. Higher-income households have also harnessed historically low interest rates to drive a boom in home sales, particularly in suburban locales. New housing starts are now trending back to pre-Global Financial Crisis (GFC) levels and residential investment is expected to be one of the fastest growing components of the economy in 2021.

CHANGING POLICIES AND CORONAVIRUS VACCINES WILL ASSIST GROWTH THIS YEAR

  • The incoming Biden administration will usher in a very aggressive fiscal stimulus package for 2021. President Biden is pushing the $1.9 trillion American Rescue Plan (ARP), which would expand direct payments to households and extend unemployment benefits and an eviction moratorium. Although not all aspects of the plan will become law, such as nationwide $15 per hour minimum wage, the overall value of the package should be close to the $1.9trillion target.
  • The most important stimulus tool is the vaccines now being deployed. They will not prevent a difficult winter but should allow for some normalization of activity by the latter half of 2021. The outlook will be uneven across sectors with technology and goods-production seeing a quicker path to recovery whilst the travel and hospitality sector will operate below capacity for some time. It is likely that H2 2021 could see a boom in leisure travel as many households wish to deploy their savings on a much-needed vacation.
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THE WINTER WILL BE CHALLENGING BUT THE OUTLOOK FOR 2021 IS PROMISING 

  1. The economy hit a soft patch during the end of 2020 as rampant COVID-19 spread—the spread was thrice the summer wave—caused economic conditions to deteriorate. Predictably, the hospitality sector was hardest hit as cold weather ruined the appetite for outdoor dining and manystates implemented strict social distancing measures. Hospitality employment declined significantly in December, although most sectors expanded headcount, causing headline employment numbers to weaken only slightly. Subdued activity should continue during the winter months and the pace of first quarter growth should be just 1.3% per annumbefore averaging nearly 7% during the final three quarters of the year.
  2. Positive tailwinds will support growth this year. Higher-paying occupations have generally withstood layoffs and these workers have substituted spending on services, like leisure travel, for consumer goods or have increased their savings rate to record levels. This suggests strongconsumption ahead, which could expand by 5% this year. Higher-income households have also harnessed historically low interest rates to drive a boom in home sales, particularly in suburban locales. New housing starts are now trending back to pre-Global Financial Crisis (GFC) levels and residential investment is expected to be one of the fastest growing components of the economy in 2021. 

 

CHANGING POLICIES AND CORONAVIRUS VACCINES WILL ASSIST GROWTH THIS YEAR

The incoming Biden administration will usher in a very aggressive fiscal stimulus package for 2021. President Biden is pushing the $1.9 trillion American Rescue Plan (ARP), which would expand direct payments to households and extend unemployment benefits and an eviction moratorium. Although not all aspects of the plan will become law, such as nationwide $15 per hour minimum wage, the overall value of the package should be close to the $1.9trillion target.

The most important stimulus tool is the vaccines now being deployed. They will not prevent a difficult winter but should allow for some normalization of activity by the latter half of 2021. The outlook will be uneven across sectors with technology and goods-production seeing a quicker path torecovery whilst the travel and hospitality sector will operate below capacity for some time. It is likely that H2 2021 could see a boom in leisure travel asmany households wish to deploy their savings on a much-needed vacation. 

THE WINTER WILL BE CHALLENGING BUT THE OUTLOOK FOR 2021 IS PROMISING 

  1. The economy hit a soft patch during the end of 2020 as rampant COVID-19 spread—the spread was thrice the summer wave—caused economic conditions to deteriorate. Predictably, the hospitality sector was hardest hit as cold weather ruined the appetite for outdoor dining and manystates implemented strict social distancing measures. Hospitality employment declined significantly in December, although most sectors expanded headcount, causing headline employment numbers to weaken only slightly. Subdued activity should continue during the winter months and the pace of first quarter growth should be just 1.3% per annumbefore averaging nearly 7% during the final three quarters of the year.
  2. Positive tailwinds will support growth this year. Higher-paying occupations have generally withstood layoffs and these workers have substituted spending on services, like leisure travel, for consumer goods or have increased their savings rate to record levels. This suggests strongconsumption ahead, which could expand by 5% this year. Higher-income households have also harnessed historically low interest rates to drive a boom in home sales, particularly in suburban locales. New housing starts are now trending back to pre-Global Financial Crisis (GFC) levels and residential investment is expected to be one of the fastest growing components of the economy in 2021. 

 

CHANGING POLICIES AND CORONAVIRUS VACCINES WILL ASSIST GROWTH THIS YEAR

The incoming Biden administration will usher in a very aggressive fiscal stimulus package for 2021. President Biden is pushing the $1.9 trillion American Rescue Plan (ARP), which would expand direct payments to households and extend unemployment benefits and an eviction moratorium. Although not all aspects of the plan will become law, such as nationwide $15 per hour minimum wage, the overall value of the package should be close to the $1.9trillion target.

The most important stimulus tool is the vaccines now being deployed. They will not prevent a difficult winter but should allow for some normalization of activity by the latter half of 2021. The outlook will be uneven across sectors with technology and goods-production seeing a quicker path torecovery whilst the travel and hospitality sector will operate below capacity for some time. It is likely that H2 2021 could see a boom in leisure travel asmany households wish to deploy their savings on a much-needed vacation. 

THE WINTER WILL BE CHALLENGING BUT THE OUTLOOK FOR 2021 IS PROMISING 

  1. The economy hit a soft patch during the end of 2020 as rampant COVID-19 spread—the spread was thrice the summer wave—caused economic conditions to deteriorate. Predictably, the hospitality sector was hardest hit as cold weather ruined the appetite for outdoor dining and manystates implemented strict social distancing measures. Hospitality employment declined significantly in December, although most sectors expanded headcount, causing headline employment numbers to weaken only slightly. Subdued activity should continue during the winter months and the pace of first quarter growth should be just 1.3% per annumbefore averaging nearly 7% during the final three quarters of the year.
  2. Positive tailwinds will support growth this year. Higher-paying occupations have generally withstood layoffs and these workers have substituted spending on services, like leisure travel, for consumer goods or have increased their savings rate to record levels. This suggests strongconsumption ahead, which could expand by 5% this year. Higher-income households have also harnessed historically low interest rates to drive a boom in home sales, particularly in suburban locales. New housing starts are now trending back to pre-Global Financial Crisis (GFC) levels and residential investment is expected to be one of the fastest growing components of the economy in 2021. 

 

CHANGING POLICIES AND CORONAVIRUS VACCINES WILL ASSIST GROWTH THIS YEAR

The incoming Biden administration will usher in a very aggressive fiscal stimulus package for 2021. President Biden is pushing the $1.9 trillion American Rescue Plan (ARP), which would expand direct payments to households and extend unemployment benefits and an eviction moratorium. Although not all aspects of the plan will become law, such as nationwide $15 per hour minimum wage, the overall value of the package should be close to the $1.9trillion target.

The most important stimulus tool is the vaccines now being deployed. They will not prevent a difficult winter but should allow for some normalization of activity by the latter half of 2021. The outlook will be uneven across sectors with technology and goods-production seeing a quicker path torecovery whilst the travel and hospitality sector will operate below capacity for some time. It is likely that H2 2021 could see a boom in leisure travel asmany households wish to deploy their savings on a much-needed vacation. 

THE WINTER WILL BE CHALLENGING BUT THE OUTLOOK FOR 2021 IS PROMISING 

  1. The economy hit a soft patch during the end of 2020 as rampant COVID-19 spread—the spread was thrice the summer wave—caused economic conditions to deteriorate. Predictably, the hospitality sector was hardest hit as cold weather ruined the appetite for outdoor dining and manystates implemented strict social distancing measures. Hospitality employment declined significantly in December, although most sectors expanded headcount, causing headline employment numbers to weaken only slightly. Subdued activity should continue during the winter months and the pace of first quarter growth should be just 1.3% per annumbefore averaging nearly 7% during the final three quarters of the year.
  2. Positive tailwinds will support growth this year. Higher-paying occupations have generally withstood layoffs and these workers have substituted spending on services, like leisure travel, for consumer goods or have increased their savings rate to record levels. This suggests strongconsumption ahead, which could expand by 5% this year. Higher-income households have also harnessed historically low interest rates to drive a boom in home sales, particularly in suburban locales. New housing starts are now trending back to pre-Global Financial Crisis (GFC) levels and residential investment is expected to be one of the fastest growing components of the economy in 2021. 

 

CHANGING POLICIES AND CORONAVIRUS VACCINES WILL ASSIST GROWTH THIS YEAR

The incoming Biden administration will usher in a very aggressive fiscal stimulus package for 2021. President Biden is pushing the $1.9 trillion American Rescue Plan (ARP), which would expand direct payments to households and extend unemployment benefits and an eviction moratorium. Although not all aspects of the plan will become law, such as nationwide $15 per hour minimum wage, the overall value of the package should be close to the $1.9trillion target.

The most important stimulus tool is the vaccines now being deployed. They will not prevent a difficult winter but should allow for some normalization of activity by the latter half of 2021. The outlook will be uneven across sectors with technology and goods-production seeing a quicker path torecovery whilst the travel and hospitality sector will operate below capacity for some time. It is likely that H2 2021 could see a boom in leisure travel asmany households wish to deploy their savings on a much-needed vacation. 

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