2020 was the most interesting year that many of us have seen in our lives. No one expected worldwide lockdowns and over 1 million deaths as a result of the COVID-19 outbreak by 2020. Nobody expected the world’s governments to react the way they did. And yet we’re doing our best here at the end of 2020 to find out how the economic trends will develop in 2021.
One thing that 2020 made it clear is that no one has a crystal ball. Given that, there are trends and key people that Americans should be watching closely in 2021.
Note: This is only the author’s opinion and should not be taken as investment advice in any way.
Economic trends will follow in 2021
Joe Biden, the Democratically Controlled House and Senate
Republicans are still vying for control of the Senate through December 2020, and only the Senate race in Georgia remains untold. However, the presidential election is over and Joe Biden is the elected President of the United States.
No matter which side of the political fence you are on, it’s still important to watch what Biden and the House are doing. There are guidelines they could adopt that could affect the economy in the short and long term. We will refrain from speculating. However, if you watch closely and see what the Trump administration did compared to the Biden administration, you will see how Biden’s election will affect the economy over the next four years.
One big area of interest is what the Biden government is planning on China. Trump had been in a “trade war” with China and had used tariffs to reduce imports of Chinese goods into the US. Depending on what Biden does to counter these tariffs, US-China relations can change, which could have a positive impact on the economy.
Watch China closely
China grew rapidly. China’s GDP growth rate was 6.11% in 2019, 6.75% in 2018 and 6.95% in 2017. According to Fitch Ratings, GDP growth of up to 8% is expected in 2021. The GDP growth rate isn’t the only reason we should keep an eye on China, however.
The Chinese government under President Xi Jinping has made decisions that may affect its trade relations. The reported use of forced labor camps with Uyghur Muslims as labor has resulted in some companies severing ties with Chinese factories. In addition, China responded to the Trump administration’s “trade war” with additional retaliatory tariffs.
Although China’s activities are at odds with world powers, it is unclear what (if anything) they will do against China in 2021. If we watch China closely in the coming year, we can get an idea of the future economic situation. Read this blog about economic trends 2021.
COVID-19 vaccine trials and distribution
By December 2020, several companies and organizations had completed studies for their COVID-19 vaccines. New York has started its COVID-19 vaccination program in earnest to address the problem head on.
Over the course of 2021, more and more programs will be launched to distribute the COVID-19 vaccine to people. The first to receive them are healthcare workers and at risk groups, followed by the rest of the population.
News of COVID-19 vaccinations should be watched closely. Some vaccines may not be as effective as others. Some countries, states, and municipalities are better able to vaccinate their populations. This could lead to a one-sided economic recovery.
Work from home could stay here
COVID-19 has changed a lot in the way we live. We quickly got used to doing most of our shopping online, going out only when needed, and working from home and school. Our life has taken care of our home more than ever.
With vaccines on the horizon, we may be able to see a “new normal” that is more like the old one. But there are indications that our work will stay from home. Approximately 56% of the US workforce has a job that is at least partially compatible with working from home. Global Workplace Analytics assumes that around 25 to 30% of the workforce will continue to work from home several days a week by the end of 2021.
Some tech companies, including Microsoft and Reddit, have stopped matching wages with the cost of living. This suggests that they may expect much of their workforce to stay away for the time being.
If you’re still trying to figure out how to work from home, check out this article we wrote in early 2020!
Conclusion: keep an eye on world events!
2020 was an eye opener. It showed us that it doesn’t take much for things to collapse. It also showed us that, as a global society, we can find a way to recover even when things collapse.
Economic trends will follow in 2021
2020 was an eye opener. It showed us that it doesn’t take much for things to collapse. Read this blog on Economic Trends 2021 to follow.
Jason M. Kaplan, Esq.
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