By M. Ray Perryman, PhD, CEO and President of The Perryman Group
Overview – With COVID-19 vaccination programs ongoing and effective treatments better understood, a new normal should be possible at some point in 2021. There are myriad challenges, but the path is beginning to emerge.
Employment – One key issue for 2021 is the millions who are unemployed. While employment has rebounded substantially from the bottom in April 2020, a full recovery to pre-pandemic levels will take a couple of years. In December, the unemployment rate stood at 6.7%, with 10.7 million unemployed persons, nearly twice their pre-pandemic levels in February (3.5% and 5.7 million, respectively). As expected, the pace of recovery slowed through the fall following large early gains as businesses reopened in the summer. The recent surge in cases has further stymied the comeback, and December saw a decline in payroll employment, with job losses in leisure and hospitality and in private education partially offset by gains in professional and business services, retail trade, and construction.
Stimulus – Looking ahead, one source of relief is the belated stimulus package. The $900 billion pandemic relief bill was finally enacted after months of delay and weeks of debate. It includes an additional $600 in payments to individuals, including children, and extends the enhanced unemployment benefit, though the amount is lowered to $300 per week. The bill also reopens the Paycheck Protection Program for a second round of small business loans and offers support for schools, childcare, renters, and additional food benefits. In addition, the bill provides funds for vaccine doses and distribution and continued assistance for testing.
This infusion of resources will help keep the structure of the economy intact and disseminate much-needed relief for individuals and families. The initial CARES Act was designed to provide aid for only a few months, and as the initial timeline draws to a close, the new stimulus bill will help to bridge the gap until vaccinations are widely completed. It is not sufficient, but it is necessary. A proposal for a more ambitious package has recently been offered by the incoming Administration.
Economic Outlook – All signs point to robust future expansion in an economy which was basically sound before the health crisis began. As the pandemic recedes, growth potential increases. While the recovery will no doubt be somewhat uneven and many changes lie ahead, 2021 is shaping up to be a year of transition and adjustment, but (hopefully) one that brings much needed and welcomed calm from the unprecedented storms of the recent past.
The Perryman Group’s most recent projections indicate real gross product is expected to increase by +4.08% through 2021 on a year-over-year basis, with +3.97% growth in 2022. Job gains are projected to be +5.2 million through 2021, with a gain of +4.4 million jobs the following year.
About Dr. M. Ray Perryman and the Perryman Group
Dr. Ray Perryman is President and CEO of The Perryman Group, an economic research and analysis firm based in Waco, Texas. His firm has served the needs of more than 2,500 clients, including two-thirds of the Global 25, over half of the Fortune 100, the 12 largest technology firms in the world, 10 US Cabinet Departments, the 9 largest firms in the US, the 6 largest energy companies operating in the US, and the 5 largest US banking institutions.