Watching the news lately can bring more questions than answers.
Economically, it’s upbeat news one day and not so upbeat the next. It’s hard to gauge where the economy and markets are truly heading after many unexpected events in 2020.
If you feel this way you’re not alone. But while there are many concerns and unknowns, you may be surprised to know that many economists are somewhat optimistic on the year. Here are some takeaways from a recent economist survey by The Wall Street Journal in regards to 2021:
Increased projected economic expansion
Economists now expect the economy to expand by 4.9% this year, an increase from their estimate of 4.3% last month. The forecast has brightened due to the distribution of COVID-19 vaccinations and the prospect of additional fiscal relief.
They are less optimistic about employment
The group sees 4.8 million jobs to be added this year, versus a January 2021 forecast of 5 million. There is an ongoing worry that jobs may take longer to return to certain industries, such as leisure, airlines, and restaurants.
Brace for higher inflation
They project a 2.8% increase in consumer prices in June 2021 compared with a year earlier.
Decreased chance of an economic downturn
The economists believe there is a 17.5% chance of an economic downturn in the next 12 months, an improvement from the 21.2% risk estimate in January. Vaccines and the prospect for new federal spending are driving the optimism.
While it is nice to see forecasts revised upward, it’s important to remain attentive as economic trends unfold this year. As we all know, unexpected events can change the outlook overnight. Keep us in mind as you read about the economy and markets. If you have questions, we’re more than happy to have a discussion on the ever-changing economic landscape.