Outlook 2021: Light At The End Of The Tunnel, Maybe


1. Second Half 2021 Could See Sharp Economic Recovery

2. Coronavirus to Hamstring Economy in First Half 2021

3. Vaccine Rollout Provides a Path to Economic Recovery

4. US Savings Rate & Household Net Worth Hit Record Highs

5. World Poised For Strong Economic Growth – Post Pandemic

Overview – 2H 2021 Could See Sharp Economic Recovery

Over the holidays, I spent a lot of time reading forecasts for 2021 from leading economists, big banks, think tanks and other so-called experts. Coming off one of the most volatile economic years in history due to the coronavirus pandemic, I was very interested to see what forecasters were predicting for the New Year.

What I found was there is a broad consensus about what we are likely to see in 2021.

As we all know, we are currently experiencing a record spike in COVID-19 cases, hospitalizations and deaths, and most forecasters believe this will continue to stifle the economy in the first half of this year. In fact, the evidence suggests we’ll experience yet another recession in the 1Q and 2Q. However, most also believe the pandemic will be mostly under control by mid-year thanks to widespread vaccinations in the months just ahead.

Given that, there is a near unanimous agreement among forecasters that the US economy will see a powerful rebound/expansion in the second half of this year. Economists cite the record savings rate in the middle of 2019 and pent-up demand among consumers and conclude that a powerful economic boom is all but certain as soon as we get the virus under control.

This outlook sounds good, of course, but I always worry when there is such a broad consensus among leading forecasters for what the future holds. The crowd, so to speak, is often wrong. Despite that, today I’ll summarize the prevailing forecasts for this year and their likelihood of coming true.