As we approach the end of 2020, there are good reasons to be optimistic about the coming year. At the top of the list are the positive outlooks for vaccines finally containing the pandemic. The Washington Post reports,
The Food and Drug Administration has confirmed the safety and efficacy of Pfizer’s coronavirus vaccine candidate. The review also found evidence that the vaccine, which is given in two doses, three weeks apart, began to protect people after the first dose.
Britain announced Monday morning it had begun administering the Pfizer vaccine, becoming the first Western country to begin a mass effort to inoculate people against the coronavirus.
The Telegraph reports the first person to be vaccinated was 90-year-old Margaret Keenan. Delightfully,
The second person to have the injection was 81-year-old William “Bill” Shakespeare, an in-patient on the hospital’s frailty wards from Coventry who, appropriately, is local to his namesake’s county of birth, Warwickshire.
U.S. vaccinations could begin as early as next month, but it’s likely to be months before the vaccine reaches most everyone. Still, the availability of effective vaccines has boosted economists’ expectations for a recovery. The National Association for Business Economics reports a full recovery is anticipated by the end of 2021.
The NABE Outlook panel anticipates more moderate growth in economic activity going forward after the sharp rebound during the third quarter,” said NABE President Manuel Balmaseda, CBE, chief economist, CEMEX. “The median forecast calls for a 4.1% annualized growth rate in the fourth quarter of 2020 for inflation-adjusted gross domestic product, or real GDP. In addition to the 33.1% GDP growth in the third quarter of the year, this would reverse much of the 32% annualized decline from the second quarter. ”
“NABE panelists have become more optimistic, on balance, with nearly one-third revising their outlook higher based on recent news of effective vaccines,” added Survey Chair Holly Wade, executive director, NFIB Research Center. “Seventy-three percent of panelists believe that the economy will have returned to pre-pandemic GDP levels by the second half of 2021, 18% expect it to reach that level in the first half of 2022, and 10% believe it will occur in the second half of 2022 or later. The 73% is a dramatic improvement from the October survey in which 38% of panelists believed that a full recovery would occur before 2022.”
As the Associated Press reports, there’s likely to be a slowdown before the economy accelerates again.
In the near term, economic activity is likely to slow further, with health officials warning against all but essential travel and states and cities limiting gatherings, restricting restaurant dining and reducing the hours and capacity of bars, stores and other businesses.
But if the NABE’s forecasts are right, a full recovery could be reached by late next year. If so, it would mark a remarkably quick rebound for the economy after its breathtaking plummet during the spring.
Again, Congressional action on additional pandemic relief, which may come as soon as this week, will play an outsize role in the recovery.
Economists and investors have been asking Congress and the White House to provide more support to help carry the economy through what’s expected to be a bleak winter. Momentum on Capitol Hill for a potential deal seems to have accelerated in recent days, but rancorous partisanship has prevented Democrats and Republicans for months from delivering more aid to laid-off workers and industries that have been hit hard by the pandemic.
The Bellingham Herald reports on a recent economic discussion at Western Washington University, which also charts a trajectory to full recovery by the end of next year.
State forecasters are not expecting Washington’s economy to be back to its pre-pandemic activity until the fourth quarter of 2021.
Even after we’re past the COVID-19 outbreak, activity including business travel and office space demand may take even longer to bounce back, said Steve Lerch, chief economist and executive director at the Washington State Economic and Revenue Forecast Council.
Lerch was joined by Washington State Rep. Sharon Shewmake, who is also a Western Washington University economics professor, in an online economic forecast presentation for Western Insights.
The two also note the roles played by an effective vaccine and federal relief.
While both speakers are optimistic about a recovery as a vaccine becomes widely available next year, they also expressed concern about businesses surviving until then, particularly small retail businesses and restaurants.