Decision Analyst’s U.S. Economic Index Signals Growth
The Decision Analyst U.S. Economic Index rose to 111 in April 2021, a slight increase from March 2021. The Index is 20 points above where it was 12 months ago in April 2020, but is still not back to the pre-pandemic Index levels (it is approximately 7 points below its pre-pandemic level). 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 its rebound from the low point reached in April 2020. A significant portion of the population has been vaccinated, COVID vaccines are becoming more widely accessible, and soon, it is expected that children aged 12-15 will be eligible for the vaccine. Assuming none of the COVID variants trigger a new wave of infections, the U.S. economy should pick up speed during the second quarter and continue its rapid expansion through the end of 2021 and into 2022. By early summer, many restaurants, hotels, offices, etc., could resume full and unfettered operations. A growing risk factor is accelerating asset inflation (land, real estate, stocks, houses, etc.) and accelerating inflation in commodities, materials, equipment, and consumer goods. Corporate layoffs and small business bankruptcies will continue to exert some 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 return to its pre-COVID-19 levels until 2022.”
Planned future purchases (see graphs below) continue, on average, to indicate that consumer spending (roughly 70% of the U.S. economy) is returning and will likely remain on an uptrend through the remainder of 2021. The graphs below show the percentages 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 balance of 2021,” said Thomas. After a year of lockdowns and quarantines, Americans are planning to increase travel spending in 2021, especially during the summer and second half of the year. Home improvements, such as remodeling and new furniture spending, is likely to increase, as inflation in new home prices is encouraging consumers to keep and improve their houses rather than buy a new home. All together, these graphs point to a positive economy during 2021, but with significant inflation risks and possible financial-market risks just over the horizon."
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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