Decision Analyst’s U.S. Economic Index Points to an Accelerating U.S. Economy
The Decision Analyst U.S. Economic Index stood at 114 in June 2021 for the second consecutive month. The Index is 14 points above where it was 12 months ago in June 2020 and only 4 points below the pre-pandemic Index level in 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. COVID-19 vaccines are now widely available in the U.S. and A majority of the adult U.S. population has received at least one shot of a COVID vaccine, and Children aged 12-15 are now eligible for the vaccines. Assuming none of the COVID variants trigger a new wave of U.S. infections, the U.S. economy should continue to pick up speed during the second half of 2021, and the expansion should continue into 2022. Many restaurants, hotels, offices, etc., could resume full operations by end of summer. Growing risk factors for the economic expansion are accelerating asset inflation (land, real estate, stocks, houses, etc.) and accelerating inflation in many commodities, materials, equipment, and consumer goods. Inflation can act as a drag on the economy, as it evaporates purchasing power. 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 said they are likely to make various types of purchases in the next 12 months.”
"Future purchase intentions also 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 strongly over the next 12 months. Home improvements, such as remodeling and new furniture spending, are 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."
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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