We’re still in the midst of a once-in-a-lifetime pandemic, unemployment is high and millions of Americans are struggling to make ends meet, all factors that have become major drives to pass a series of stimulus bills over the past 13 months. Noting all of this, you might be surprised to learn that the economy is actually readying to explode — and this explosion could last for several years.
In fact, many economists believe that this economic boom period could make 2021 the strongest year economically since 1984. That’s some red-hot, pre-pandemic level growth that we’re talking about here. And while the second quarter has only just begun, economists believe that this will be the strongest part of 2021 with growth at a 10 percent clip. The experts believe overall economic growth in 2021 will be somewhere in the 6 to 7 percent range.
So what’s fueling economic growth in 2021 to the point where many analysts are beyond declaring the American economy as “on its way back” and have moved firmly into the “its back” camp? There are a few notable factors. Let’s examine:
Buoyed by a third round of stimulus payments, consumer spending is currently at a high, as it’s estimated that about 25 percent of Americans who received the latest $1,400 stimulus check are using it more to treat themselves rather than on essential items. This spending is now making its way through the American economy. According to Bank of America, there’s a 67 percent increase in credit card spending in recent weeks and spending overall is up 20 percent over what it was two years ago in a surging economy.
This spending isn’t just obvious from the consumer level, but from an industry level as well. The March jobs report added more than 900,000 jobs, a sign that more businesses are once again in a position where they see future growth and opportunity.
As the rollout of safe, effective vaccines continues into this spring and summer and more Americans become vaccinated, more restrictions are likely to be lifted and reopenings are expected to escalate. Hiring is also likely to be impacted positively as well, especially when you consider that many Americans are likely content claiming unemployment while their children are learning in virtual school. Once schools are able to safely open back up, these Americans will likely be more apt to re-enter the workforce. Right now, many jobs are difficult to fill because qualified workers are in short supply. This is especially true among skilled trades workers. At the time of this writing, about 20 percent of the American population is fully vaccinated.
Despite some potential challenges (i.e., new COVID variants, the possibility of inflation, supply shortages), most economists don’t see this economic boom fully leveling off until 2023. And that’s great news for a country that has seen so many ebbs and flows over the past 13 months.