Economists Glimpse Something Like Normal on the Horizon
Nearly a year into the pandemic, the idea of getting back to something resembling normal is starting to seem more real, at least to economists reading the statistical tea leaves.
Notes of cautious optimism could be heard in separate remarks delivered Thursday by New York Federal Reserve CEO John C. Williams and Rajeev Dhawan, director of Georgia State University’s Economic Forecasting Sector, who both voiced hopeful predictions about the prospects of a vaccine-driven recovery for the battered economy.
As if to underline the point, this week’s government reports showed fewer people filing for unemployment than any time in the last three months, and consumers suddenly flush with a surprising amount of cash after income jumped an astounding 10% in a single month, according to the latest report from the Bureau of Economic Analysis. These are both steps along what Williams said would be a difficult road out of the pandemic recession, one that depends on successfully overcoming COVID-19.
“Despite these challenges and uncertainties, I have become more optimistic about the medium-term outlook for the economy,” Williams said in a videoconference with nonprofit One Hundred Black Men of New York. “I don't expect our lives to look like they did a year ago—our sense of ‘normal’ may be forever altered—but with vaccinations well underway and a significant decline nationwide in confirmed new cases, I do expect that we can start to look toward a time that will be ‘more like normal.’”
Dhawan highlighted some encouraging data pointing to increased consumer spending, including sales of watches and jewelry, which had dropped 50% during the first two months of the pandemic, now having bounced back to 20% above their levels this time last year. “Who’s buying all these watches and jewelry? We don’t know. But couples who have been confined together at home and perhaps postponed weddings, may be spending money they saved on peace offerings,” Dhawan said in prepared remarks.
In Dhawan’s view, it won't be the purchases of goods like watches and jewelry that will fuel the recovery. It will depend on the vaccines.
"There is light at the end of the tunnel but it will take time, with ‘proper’ benefits to come as more people are vaccinated successfully,” Dhawan said. “We must relearn to walk before we can run again after this major biological shock rattled economic foundations.”