‘Promising Trends’ for Economy in 2021

After the economic strains of 2020—and all that has meant for retirement plans and those who serve and participate in them—there are signs of hope for 2021, said an industry expert in a recent webinar.

In the PenChecks webinar “The US Economy in 2021—Implications for the Pension Industry,” Alex Chausovsky, senior business advisor and researcher at ITR Economics, offered his insights on current trends and what may lie ahead for the economy and the financial service sector in the year soon to come. 

The vast majority of economic indicators had been rising in 2020, but then declined, Chausovsky observed, adding that the bulk of the negativity was in the second quarter of 2020 as the pandemic suddenly worsened. However, there have been increases since April, he said. “This bodes very well” for recovery and growth in 2021, said Chausovsky, remarking that now trends “are really quite promising.”

“What we’re seeing with the yield curve is very favorable for the economy,” said Chausovsky. For instance, he observed that business bankruptcies are “surprisingly low” and that the stock market is in full recovery from the spring drop already. He added a caveat however, saying that there is concern in one area: profits relative to stock prices.

Part of the recovery, Chausovsky indicated, is the result of stimulus measures. He remarked that we’ve “never seen stimulus on this scale before” and that there was a delay in seeing the effect of the infusion of money. We’re “still seeing the effect of stimulus from earlier this year,” he observed. Disposable income increased in April and in the summer, he said, and added that it is “still above pre-COVID levels.”  

There is an unknown, Chausovsky indicated. “One of the big X factors,” he said, is whether there will be interaction of flu and COVID. “But we’re just not seeing that so far,” he told attendees, adding, “Right now, we don’t see this turning into a full-scale shut down.” 

Chausovsky sees reason for optimism. “Look for a much better 2021,” he said, adding that the recovery likely has already begun and remarking that the “green shoots of recovery” already have emerged. “It’s going to be a great ride,” he said. And, he cautioned, “You can’t allow your emotions to intrude on your decisionmaking.” 

The webinar can be viewed here; registration required.