What's Ahead For The Economy In 2021?
STEVE INSKEEP, HOST:
We have a brand-new year, which begins with the very same economy that we had yesterday. But what are the trend lines for 2021? NPR chief economic correspondent Scott Horsley joins us. Scott, Happy New Year.
SCOTT HORSLEY, BYLINE: Happy New Year to you, Steve - nowhere to go but up.
INSKEEP: Yeah, yeah, yeah. There we go. We begin the year with vaccines being distributed - not as quickly as expected, but millions of shots are out there. What's that do for the economy?
HORSLEY: Well, it does mean things are looking up. The folks at the Federal Reserve now say they think the U.S. economy is going to grow more than 4% in 2021. They think by the end of this year, unemployment will have fallen from 6.7% now to around 5%. Both those forecasts are rosier than what the Fed was expecting just a few months ago. Now, there was also a survey by the National Association for Business Economics that finds growing optimism. Nearly 3 out of 4 business economists surveyed think the economy will have regained all the ground it lost in 2020 sometime by the second half of this coming year.
INSKEEP: The second half of this coming year - but in this first half that's beginning, we clearly still don't have a handle on the pandemic.
HORSLEY: No, I mean, we're still losing more than 3,000 people every day in this country. We've lost more than 340,000 Americans so far to the virus. That's an enormous human as well as economic loss. And because so many people are still getting sick, we are seeing more restrictions imposed on in-person businesses. Consumers themselves are also getting more careful about going out and shopping and spending money. We also know now that there's a new variation of the virus here in the U.S. that appears to spread more easily. And that could lead to, you know, more restrictions still. It is encouraging that we have these highly effective vaccines that were developed at warp speed. But so far, the shots are getting out there at a much slower speed, more like a local Subway. You know, President-elect Joe Biden has set a goal of delivering 100 million shots in his first 100 days in office. Right now, we're doing about 200,000. So unless there's a sharp acceleration - 200,000 a day - excuse me.
HORSLEY: So it's going to take a really sharp acceleration to get anywhere close to the kind of speed that Biden is talking about. In the meantime, public health officials say it's even more important that people keep wearing their face mask, keep their distance from other people and keep washing their hands.
INSKEEP: So this becomes the critical factor for so many businesses. If you're working in the restaurant industry, if you're running a movie theater, if you work in the airlines, anything like that, you've got hazards ahead. Other parts of the economy, I guess, would be less affected, just as was the case in 2020.
HORSLEY: That's right. This has been a really uneven recession and a really uneven recovery, both for individuals and for whole industries. People who can work from home and have a job that's in demand might be doing just fine. A lot of factories are now back to near pre-pandemic levels. They've been able to keep their workers spaced out, and they're making products that people are buying. Consumers are actually buying a lot of stuff right now. In some cases, they're spending more on goods because they can't spend money on services like eating out or traveling or going to concerts. Service businesses, though, and the people who work in those industries that - think the people, the businesses that depend on bringing people together - they're still suffering. We could, however, see a fairly rapid turnaround in services once people actually feel safe going out in crowds again. During the hunker down, some people have actually managed to put some money aside, and that pent-up demand could come unpent (ph) once the virus is under control.
INSKEEP: Where's the stock market headed?
HORSLEY: It has been a wild ride. We had a gut-wrenching plunge during the spring of 2020 when the pandemic first took hold in the U.S. But since that time, stocks have made up all the lost ground and then some. The Dow Jones Industrial Average closed yesterday at a record high. It was up more than 7% from the beginning of 2020. The S&P 500 grew more than 16% last year. Some of that was driven by big technology stocks that profited from our stay-at-home lifestyles during the pandemic - Netflix and Amazon, for example. But some of the recent gains have also come from more consumer stocks and even beaten-down industries like cruise ships. So investors are betting that the worst is now behind us and that 2021 will be brighter. Let's hope that's true of the broader economy, as well.
INSKEEP: Whatever happens, NPR chief economic correspondent Scott Horsley will be around to tell us about it. Scott, thanks so much.
HORSLEY: Thank you.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.