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Economists Expect a Tough Winter, Then a Strong Rebound
January 4, 2021
Economists expect 2021 to get off to a shaky start, but they have high hopes for the second half of the year, according to the Wall Street Journal’s most recent survey of economists. Surging coronavirus numbers, business restrictions, and wary holiday shoppers have economists worried that the economic recovery may have lost much of its momentum.
The economists surveyed expect that the December jobs report will show just 68,000 new jobs for the month, the slowest month since the crisis began and a big decline from the 245,000 jobs created the previous month. Their forecast for Q1 GDP growth was diminished from the previous survey.
Still, they have high hopes for the year as a whole. They are optimistic about the long-awaited stimulus bill. The $900 billion package may be smaller than some expected and may be coming too late to change the trajectory of the early parts of the year, but economists still believe it will boost economic activity in the coming weeks and months.
The second main cause for optimism is the savings Americans have been accumulated. With travel off the books and service spending way down, Americans are saving more. The U.S. personal saving rate was 12.9% in November, well above the 7.5% rate a year prior. This means that pent up consumers are going to be willing and able to spend big once life returns to normal, boosting expectations for the second half of the year.
