As is always true with the economy, there is both good and bad news at once.
On episode 111 of the CUES Podcast, Steve Rick says some of the good news is that the jobless rate has dropped back to a rate of 6.3%, after spiking to 14.7% at the height of the pandemic shutdown last year.
Director and chief economist at CUESolutions Platinum provider for executive benefits CUNA Mutual Group, Madison, Wisconsin, Rick says economists believe that 4.5% is the “long-run natural employment rate” in the U.S. He is forecasting reaching that rate again by the end of 2022.
“We do believe we will reach herd immunity, probably by the fourth quarter of this year … where … 75 to 80% of our population has been vaccinated and is … immune,” he says. “So, we're hoping by the end of this year to have the unemployment rate down to 5.5%.”
Some of the bad news Rick cites includes the hard hit taken by retail businesses during the government-mandated shutdowns early in 2020. Many stores, restaurants and movie theaters have been severely disrupted or even permanently shut down in what Rick calls a “retail apocalypse.”
While those that closed may never reopen, there is a glimmer of hope here, too. In the January retail sales report, Rick says, “We saw sales pick up 5.3% compared to December. Now, that's a huge jump. … if we can compare this January of 2021 … to January 2020 … before the pandemic, we're up 7.4%. Now, that is a huge increase, 7.4% in spending. … So we're actually seeing a nice recovery already.”
Rick projects a jump in gross domestic product this year of about 4.5 percentage points. “So we're going to be making 4.5% more stuff, if you will, then we did last year,” he says. “And last year … we dropped 3.5% in the production of goods and services. So, a nice recovery for 2021.
“… if we get another $1,400 stimulus check sometime this spring, you know, if President Biden gets his 1.9 trillion stimulus,” he adds, “we could see a really strong economy going into the second half of this year.”
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