Americans should get ready for the 'roaring 20s' say UCLA economists as they predict 'gloomy COVID winter and an exuberant vaccine spring' - followed by strong economic growth
Economists at UCLA have predicted another 'roaring 20s' with surging economic growth after effective coronavirus vaccines become widely available.
'The '20s will be roaring, but with several months of hardship first,' they wrote for the quarterly UCLA Anderson forecast, which is due to be released on Wednesday, according to the Los Angeles Times.
'These next few months will be dire, with rising COVID infections, continued social distancing, and the expiration of social assistance programs.'
'With a vaccine and the release of pent-up demand, the next few years will be roaring as the economy accelerates and returns to previous growth trends,' wrote Leo Feler, a senior economist with the forecast. 'We expect a surge in services consumption and continued strength in housing markets to propel the economy forward.'
The UCLA forecast assumes mass vaccination of Americans will take place by summer. An FDA panel is set to meet on Thursday to review Pfizer's vaccine, which has already been approved in the UK.
Economists at UCLA have predicted another 'roaring 20s' with surging economic growth following widespread vaccination. Pictured, flappers do the Charleston in the 1920s
UCLA economists predict that annualized GDP growth will accelerate from a weak 1.2 percent in the current quarter to 1.8 percent in the first quarter of next year, before surging 6 percent in Q2 2021 and growing a consistent 3 percent each quarter following into 2023
The economists predicted a release of pent-up demand will drive growth next year
The report forecasts 'a gloomy COVID winter and an exuberant vaccine spring,' followed by robust growth for some years.
The UCLA economists predict that annualized GDP growth will accelerate from a weak 1.2 percent in the current quarter to 1.8 percent in the first quarter of next year, before surging 6 percent in next year's second quarter and growing a consistent 3 percent each quarter following into 2023.
'Once vaccines are widely available, we expect a release of pent-up demand and a significant surge in spending on restaurants, recreation, travel, and accommodation, as well as in healthcare services, as people resume non-urgent and elective healthcare visits,' Feler wrote on Twitter.
Feler did note that the UCLA forecast predicted unemployment would not reach pre-pandemic levels until 2024 at the earliest. The forecast also shows consumer spending reaching 2019 levels in 2022.
Still, it is a rosier outlook than other economists have issued. Last month, JPMorgan warned that 'this winter will be grim' and predicted negative GDP growth in the first quarter of 2021.
Even with 6.0% growth in Q2, the economy will still be 4.8% below trend at the end of 2021, Feler said
The UCLA forecast predicted unemployment would not reach pre-pandemic levels until 2024
110K restaurants close permanently
New data from the National Restaurant Association this week revealed that 110,000 restaurants have permanently closed during pandemic lockdowns, or one out of six nationwide.
The restaurants on average had been open for 16 years and employed 32 people. It means that on a national scale, more than 3 million jobs have permanently disappeared.
The association says that if more help doesn't come, another 37 percent of the surviving restaurants will be forced to close in the next six months.
Moody's Analytics chief economist Mark Zandi warned last week that it could take four years to recover all of the U.S. jobs lost during the pandemic.
'Tens of thousands of mom-and-pop retailers have failed and midsize publicly traded retailers have filed for bankruptcy, while the retail behemoths gobbled up market share,' Zandi said in a note.
Meanwhile, more productive industries - those that can produce more with less labor - have expanded, including technology, wholesaling, and professional services.
Zandi wrote that these industries have 'deployed technologies and processed changes that they were investing in but reluctant to take full advantage of during the good times.'
He suggested that this trend could result in a decoupling of jobs growth from GDP growth, in which employment languishes while higher productivity contributes to strong GDP growth.
New data from the National Restaurant Association this week revealed that 110,000 restaurants have permanently closed during pandemic lockdowns, or one out of six nationwide.
The restaurants on average had been open for 16 years and employed 32 people. It means that on a national scale, more than 3 million jobs have permanently disappeared.
The Association revealed the devastating numbers in a letter to Congress begging for a federal bailout soon.
They say that if more help doesn't come, another 37 percent of the surviving restaurants will be forced to close in the next six months.
According to a survey of 6,000 restaurants, 17 percent have closed since March
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'For nearly nine months, restaurants—our nation's second-largest private sector employer—have been in an economic free fall as a result of mandated closures and capacity limits due to the coronavirus pandemic,' the letter said.
'The tide of restaurants closures and bankruptcies continues to rise—sweeping away jobs in some of the most venerated independent and chain restaurants.'
Since March, nearly 69 million people have filed for unemployment. For the week ending November 21, at least 5.5 million were continuing to receive jobless benefits.
The total number of U.S. jobs remains about 10 million lower than it was prior to the pandemic, federal data shows.
Labor Department data shows new jobless claims and continuing claims
In November, the unemployment rate edged down to 6.7 percent, according to federal data released last week.
That rate is down by 8.0 percentage points from its recent high in April but is 3.2 percentage points higher than it was in February.
The number of unemployed persons, at 10.7 million, continued to trend down in November but is 4.9 million higher than in February, before the pandemic struck.
Most economists agree the distribution of an effective vaccine would likely reinvigorate growth next year.
Yet they warn that any sustained recovery will also hinge on whether Congress can agree soon on a sizable aid package to carry the economy through what could be a bleak winter.
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