NEW YORK–A number of economic analysts are suggesting there is an “intriguing if indistinct prospect” lying in the economic future of the U.S.: a post pandemic boom.
“Forecasters have always expected the pandemic to be followed by a period of strong growth as businesses reopen and Americans resume their normal activities,” noted the New York Times in its summation. “But in recent weeks, economists have begun to talk of something stronger: a supercharged rebound that brings down unemployment, drives up wages and may foster years of stronger growth.”
The Times pointed to “hints that the economy has turned a corner,” including a recent jump in retail sales and a slow decline in new unemployment claims (although they remain high), as well as increased confidence among business executives.
The Times noted economists surveyed by the Federal Reserve Bank of Philadelphia this month predicted that U.S. output will increase 4.5% this year, which would make it the best year since 1999. Some expect an even stronger bounce: Economists at Goldman Sachs forecast that the economy will grow 6.8% this year and that the unemployment rate will drop to 4.1%A by December, a level that took eight years to achieve after the last recession, the Times analysis added.
‘Very High Growth Rate’
“We’re extremely likely to get a very high growth rate,” Jan Hatzius, Goldman’s chief economist, told the New York Times. “Whether it’s a boom or not, I do think it’s a V-shaped recovery.”
According to the report, the growing optimism stems from the confluence of several factors: coronavirus cases are falling in the United States; the vaccine rollout, though slower than hoped, is gaining steam, and largely because of trillions of dollars in federal help, the economy appears to have made it through last year with less structural damage — in the form of business failures, home foreclosures and personal bankruptcies — than many people feared last spring.
“Lastly, consumers are sitting on a trillion-dollar mountain of cash, a result of months of lockdown-induced saving and successive rounds of stimulus payments,” the Times reported. “That mountain could grow if Congress approves the aid to households that President Biden has proposed. When the pandemic ends, cash could be unleashed like melting snow in the Rockies: Consumers, released from their cabin fever, compete for hotel rooms and restaurant tables. Businesses compete for employees and supplies to meet the demand. Workers who were sidelined by childcare responsibilities or virus fears are drawn back to the labor force by suddenly abundant opportunities.”
‘Big Boom’
“There will be this big boom as pent-up demand comes through and the economy is opening,” Ellen Zentner, chief U.S. economist for Morgan Stanley, told the Times. “There is an awful lot of buying power that we’ve transferred to households to fuel that pent-up demand.”
But there are potential roadblocks, including delays in vaccine rollout could stall the recovery and any stalemates in Washington.