2020 was the most interesting year that many of us have seen in our lifetimes. Coming into 2020, nobody expected global lockdowns and over 1 million deaths worldwide as a result of the COVID-19 outbreak. Nobody expected the world’s governments to respond the way they did. And yet, here we are, at the end of 2020, doing our best to figure out how economic trends 2021 is going to do.
One thing that 2020 has made clear is that nobody has a crystal ball. With that being said, there are trends and key people that Americans should watch closely in 2021.
Note: This is only an opinion of the author and is in no way to be construed as investing advice.
Joe Biden, The Democrat-Controlled House & The Senate
As of December 2020, the Republicans are still vying for control over the Senate with only the Georgia senate race still left uncounted. However, the presidential election is over and Joe Biden is the President elect of the United States.
No matter what side of the political fence you’re on, it’s still important to watch what Biden and the House do. There are policies they could pass that could impact the economy in both the short and long terms. We will abstain from speculating, however if you watch closely and see what the Trump administration did versus what the Biden administration does, you’ll see how Biden’s election will affect the economy over the next four years.
One big area of interest is what Biden’s administration plans to do regarding China. Trump had been in a “trade war” with China, using tariffs to reduce the importation of Chinese goods into the US. Depending on what Biden does about these tariffs, we may see a change in US-China relations which could affect the economy positively.
Watch China Closely
China has been rapidly growing. China’s GDP growth rate was 6.11% in 2019, 6.75% in 2018, and 6.95% in 2017. They’re expected to see up to 8% GDP growth in 2021, according to Fitch Ratings. But GDP growth rate isn’t the only reason why we should be keeping an eye on China.
The Chinese government, led by President Xi Jinping, has made decisions that may affect its trade relationships. Its reported use of forced labor camps using Uighur Muslims as labor has caused some companies to cut ties with Chinese factories. Not only that, but China had responded to the Trump administration’s “trade war” with additional retaliatory tariffs.
Although China’s activities put it at odds with world powers, it’s unclear what (if anything) they plan to do about China in 2021. Watching China closely over the coming year will help us get an idea of the economic situation going forward. Keep reading this blog on economic trends 2021.
COVID-19 Vaccine Trials & Distribution
As of December 2020, several companies and organizations have completed trials for their COVID-19 vaccines. New York has begun its COVID-19 vaccination program in earnest, aiming to deal with the problem head on.
During 2021, more and more programs will be started to distribute the COVID-19 vaccine to people. The first ones to receive them will be healthcare workers and at-risk groups, followed by the rest of the population.
News regarding COVID-19 vaccinations should be watched closely. Some vaccines may not be as effective as others. Some countries, states, and municipalities may do a better job vaccinating their population. This could result in lopsided economic recovery.
Work From Home Might Be Here to Stay
COVID-19 changed a lot about the way we live our lives. We have quickly adapted to doing most of our shopping online, going out only when necessary, and doing both work and school from home. Our lives have been centered around the home, more so than ever before in our lifetimes.
With vaccines on the horizon, we may be able to see a “new normal” that more closely resembles the old. But there’s evidence that our working from home will be here to stay. About 56% of the US workforce holds a job that is at least partially compatible with working from home. Global Workplace Analytics expects that around 25-30% of the workforce will continue working from home for several days of the week by the end of 2021.
Some tech companies, including Microsoft and Reddit, have stopped adjusting pay to cost of living. This indicates that they may expect a large portion of their workforce to remain remote for the time being.
If you’re still trying to figure out how to make working from home work for you, check out this article we wrote earlier in 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 break down. It also showed us that even when things DO break down, we as a global society find a way to bounce back.
Economic Trends to Follow in 2021
2020 was an eye-opener. It showed us that it doesn’t take much for things to break down. Read this blog on economic trends 2021 to follow.
Jason M. Kaplan, Esq.
The Credit Pros