After an unprecedented year of economic shutdowns, business closures, and employee lay-offs, the United States has finally transitioned from a stage of recovery and rehabilitation to an era of growth and development. As the country moves into Q3, many forecasters predict that the economy will be significantly stronger than it was at the start of the pandemic
This phenomenon is likely a culmination of several factors: the disbursement of stimulus checks (likely the reason why consumer spending grew at a rate of 11.4% in Q1), the reopening of businesses, and the rollout of COVID-19 vaccines, to name a few. Households have more savings built up, due to the lack of spending caused by the 2020 lockdowns; and the transition to virtual workplaces has allowed businesses to cut costs and focus on profit maximization. And, despite the concern regarding the Delta variant of Covid-19, as vaccine distribution progresses nationwide, many states and businesses are still eyeing reopening at full capacity.
Still Booming Out There
As a result of this increased consumer spending, economists project the United States’ GDP to grow by 6.6% in 2021—on track to be the country’s highest GDP since 1984. Nearly every economic sector has observed substantial growth this year, especially energy, financials, and industrials. The country’s GDP is expected to continue to grow in 2022 and 2023: economists forecast growth rates of 3.8% and 2.5%, respectively.
Low Unemployment, Higher Wages
Although growth in the job market remains slower than anticipated, unemployment rates continue to drop and are on track to reach pre-pandemic levels by the beginning of 2023. 3.3 million jobs were added to the economy in the first half of 2021, and we expect to see similar statistics throughout Q3 and Q4. Pressures in the supply chain management sector are responsible for fueling the demand for more employees in the workforce—as businesses begin to reopen at full capacity, they face significant consumer demands and thus are striving to achieve production rates that surpass pre-pandemic levels. As labor demands rise, so do labor wages—the average hourly wage in the United States is currently $25.68, a 7.54% increase compared to the average hourly wage of $23.88 in January 2020.
Inflation Stays in Check
While many economists worry that such rapid economic growth could lead to inflation, the Conference Board forecasts that inflation will peak at the end of 2021 and begin to stabilize throughout 2022. The Federal Reserve Board has stated that price growth will have “only transitory effects on underlying inflation,” likely because the base effect for inflation is abnormally low due to significant price drops at the beginning of the pandemic.
Although the past sixteen months have been tumultuous for the economy, the future appears bright: a heightened level of consumer spending indicates promising growth in nearly every economic sector, which will aid in restoring the job market and strengthening the GDP. As we progress into fall, economic forecasts are favorable for businesses and individuals alike, proving that our resilience and patience have paid off—our economy is steadily growing and will hopefully continue to progress in such a manner.
If you’ve been looking at starting a business of your own through franchise ownership, the economic outlook for the remainder of 2021 into 2022 still looks quite stable—and favorable for growth. Make a no-cost, no-obligation appointment with a qualified FranNet representative who both lives and works in your area, and let’s find out what your entrepreneurial dreams look like.