Decision Analyst’s U.S. Economic Index Gains Momentum

The Decision Analyst U.S. Economic Index rose to 114 in May 2021, a 3-point improvement from April 2021. The Index is 17 points above where it was 12 months ago in May 2020 and only 4 points below the pre-pandemic Index level from January 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 its rebound from the low point reached in April 2020. A significant portion of the population has been vaccinated, COVID vaccines are now widely available in the U.S., and children aged 12-15 are now eligible for the vaccine. Assuming none of the COVID variants trigger a new wave of infections, the U.S. economy should continue to pick up speed during the second half of 2021 and continue its expansion through the end of 2021 and into 2022. Many restaurants, hotels, offices, etc., could resume full and unfettered operations over the summer. A growing risk factor for the economic expansion is accelerating asset inflation (land, real estate, stocks, houses, etc.) and accelerating inflation in commodities, materials, equipment, and consumer goods. Inflation can act as a drag on the economy, as purchasing power is reduced. Small business and personal bankruptcies will continue to exert some negative influence on the U.S. economy through the balance 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) will likely remain strong throughout the summer and fall. 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 stay strong, 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."

Methodology

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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