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Summer is going to be hot for the economy

in Sports
Summer is going to be hot for the economy

According to Chauncey Gardiner, played by Peter Sellers in the 1979 movie “Being There,” this was all that you needed to know about the economy. While we are not gardeners, strong growth in the spring was the main message from our State of the Region presentation: we forecast growth rates of 5.5% for the first quarter 2021 in the U.S. and 7.4% for the year as a whole.

Regardless, even with growth this strong, it will take us until the second quarter of 2021 to reach pre-recession output levels of 2019, and even longer (until mid-2022) if we add the “normal” of 2.5% to end of 2019 output levels. This simply shows you how deep the abyss was that the U.S. economy fell into.

Why the optimism?

One major reason is the already existing pent-up demand of U.S. households, another lies in the increased coronavirus vaccination rates not only in California but elsewhere in the nation, and finally the $1.9 trillion stimulus package passed by the Biden administration and Congress. There have been some skeptical voices regarding each one of these points. For example, some have argued that even if households increase spending for leisure and hospitality, you cannot eat twice as much food in the restaurant as before (although some of us probably could), nor stay twice as long on vacation.

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