“The U.S. economic recovery is likely to slow further before the impact of expected approvals of Covid-19 vaccines makes itself felt in the second quarter of 2021,” according to a new WSJ survey.
Why It Matters: While the arrival of a safe and effective vaccine is a monumental accomplishment, distribution and the population’s willingness to receive the shot remain hurdles. As a result, according to WSJ, several economists expect Covid-19 cases to remain high in Q1 until the vaccine is widely available.
- “Real-time data point to a slow entry into 2021 with the health situation worsening, employment softening and spending moderating,” said Oxford Economics’ Chief U.S. Economist Gregory Daco.
Numbers To Consider:
- On an annual rate from January to March, economic expansion is expected to be 1.9%, a drop from 3.3% in November’s survey. Economists project the labor market will add around 295,000 jobs per month in Q1, which also decreased from the 440,000 per month estimate in November.
- Those surveyed, 62.5% to be precise, expect the vaccine to be a boon to Q2 numbers, adding more than “0.5 percentage point to the annualized growth rate in the April-to-June period.”
- Nine out of 10 economists in the survey expect the “rollout of coronavirus vaccines will cause hiring to accelerate in the second quarter. Less than half said they expect hiring to accelerate in the first quarter because of the shots.”
The Final Word: The renewed virus surge and subsequent restrictions in many places threaten recovery further. But the combination of a new fiscal stimulus package and the rollout of the vaccine could improve the economy’s recovery outlook.
As predicted, especially by Goldman Sachs, December is looking to be flat-to-down. I’m seeing some calls for a “Santa Claus Rally”, which has yet to materialize. Most analysts, though, seem to think that January will be a very strong year in the equity markets. We’ll use this down period to improve ROIC features at acouplecents.com, do more research on companies, pick up some of our favorites at a discount.