Decision Analyst’s U.S. Economic Index Signals Growth for First Half of 2021
The Decision Analyst U.S. Economic Index stood at 107 in February 2021, a 2-point increase from January 2021. The Index is still 8 points below where it was in February 2020. The Index tends to be a leading indicator of future economic activity. The past-20-year history of the Index is shown below.
“The U.S. Economic Index continues to signal economic growth for the first half of 2021, albeit at a slow rate. If the pace of U.S. COVID-19 vaccinations continues its upward trajectory, the U.S. could be vaccinating 4 to 5 million people a day by the end of March or early April. If these high numbers are achieved, COVID cases will fall dramatically in May, June, and July. By summer, many restaurants, hotels, offices, etc., could resume full and unfettered operations. The good news about vaccinations, plus the latest round of stimulus, suggests that the second quarter will see the U.S. economy accelerate at a rapid pace. A growing risk factor is accelerating asset inflation (land, real estate, stocks, houses, etc.), higher interest rates, and the concomitant risks of financial crises caused by overstimulation of the U.S. and the world economy. Corporate layoffs and business bankruptcies will continue to exert a drag on the U.S. economy through much of 2021,” said Jerry W. Thomas, President/CEO of Decision Analyst. “The U.S. economy will not quickly return to its pre-COVID-19 levels.”
“Planned future purchases (see graphs below) continue, on average, to indicate that consumer spending (roughly 70% of the U.S. economy) is likely to remain somewhat stable during the first half of 2021—with a high likelihood that vacation travel will resume as summer approaches. The graphs below show the percentage of U.S. households who say they are likely to make various types of purchases in the next 12 months.”
"These future purchase intentions suggest that the economy will continue to grow during the first half of 2021. After a year of lockdowns and quarantines, there is evidence that Americans want to increase travel spending this year, especially during the second half of the year. Remodeling and home purchases will likely be flat to modestly up in 2021. All together, these graphs point to a positive economy during 2021, but with significant risks lurking in the shadows,” said Thomas.
The Decision Analyst Economic Index is based on a monthly online survey of several thousand households balanced by gender, age, and geography. The scientific survey is conducted in the last 10 days of each month. The Economic Index is calculated from 9 different economic measurements using a sophisticated econometric model. The result is a snapshot of coming economic activity in each country surveyed, as seen through the eyes of representative consumers living in the respective countries.
Decision Analyst conducts its concurrent economic surveys each month in Argentina, Brazil, Canada, Chile, Colombia, France, Germany, India, Italy, Mexico, Peru, the Russian Federation, Spain, and the United States. Whenever the Decision Analyst Economic Index is greater than 110, it tends to signal an expanding economy. An Index value of 90 to 110 suggests a no-growth or slow-growth economy, and near or below 90 generally indicates economic contraction. These guidelines vary by country, however.
About Decision Analyst
Decision Analyst (www.decisionanalyst.com) is a global marketing research and analytical consulting firm specializing in strategy research, new product development, advertising testing, and advanced modeling for marketing decision optimization. For over 40 years, the firm has delivered competitive advantage to clients throughout the world in consumer-packaged goods, telecommunications, retail, technology, medical, and automotive industries.
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