December 28th, 2020

2021 Forecast Column #1 – COVID, Economy, Politics

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The three words to describe 2021 are: Acceleration / Collapse / Rebound. I will go into this at length in the next few columns. Here is the first one

The Big Three for America

COVID-19/ Vaccines

America won’t be in a post COVID-19 world until the fourth quarter of 2021 at the earliest. Probably 2022. Patience is a virtue.

America will ultimately suffer somewhere around 700,000+ deaths, or another 400,000 from the date of this column. This will make it the worst death event in our history.
The majority of these deaths will be people who didn’t wear masks and the people they infected as a result. Unfortunate, but true. Hopefully, this reality will sink in post-election and post-inauguration.
The vaccines are absolutely a wonderful development. Today’s global connectivity shortened the time required to develop an effective vaccine. Yet, there will be inevitable problems in the logistical supply. That will delay the progress of reaching the necessary threshold of vaccination of 75% of the population.
As a person over the age of 65 who lives in Florida, it is estimated that I will receive the vaccination by late March or April. If there are snags in the vaccine supply chain between now and then, I might not get vaccinated until May. Since, due to my age, I am somewhere in the middle of the prioritized list, this suggests that it will not be until September that America will be in a post-virus world.
Here is the simple math on vaccines: 330 million Americans/ 75% will need to be vaccinated to allow a post-COVID economy to truly come back. 75% of 330 is 250 million. Times that by two as each person will need two shots so the total number of shots is 500 million. This means five million shots per day to reach 75% by mid-April. Two million shots per day brings us to Labor Day. In the first week of the Pfizer vaccine there were 75,000 vaccines, or 10,000 per day.
Proof of vaccination will become extremely important. Sports arenas, movie theaters, churches… any venue where large groups of people congregate will require that a vaccine card be produced as a prerequisite for attendance. Some professional sports teams have already stated this. There will be sophisticated electronic scanning around this issue. The good news within this is that people who still think the virus is a hoax [Really?!] will have to make a choice. This will also challenge the “anti-vaccers” to make a decision between holding that point of view or in this case getting a COVID-19 vaccination. Public health safety will force folks who don’t get vaccinated to not be able to participate in the economy to a great extent.
Once there is about 25% of the adult population vaccinated, there will be mandates that say that restaurants, bars, cafes, and theaters may open, BUT they must check all patrons to confirm vaccination. This will both helps stem the outbreak and will allow businesses small and large to open and operate as they did pre-COVID-19. This will obviously create an impetus to get vaccinated. No vaccination, no entrance.

Economy

The economy is slowing down as dramatically of this writing. It will continue to do so, largely due to the virus. Unemployment claims are back up again. Retail sales are down. $1.5 and 3 Trillion in stimulus to cities, states, counties, schools and individuals who will spend the money and get it into circulation seems to be necessary.
Unfortunately, we will see sights that are embarrassing at the least: a dramatic increase in homelessness, ever growing lines at food banks, overstressed charities and survival theft. Today there are reports of people stealing from grocery stores, who when caught plead hunger. In America! I hope this will move us and unite us to love thy neighbor and face our common good together.
My forecast back in April that both the US GDP and the global GDP would be down 10% in comparison to 2019. The will most likely end up 5-7% down with great variability globally. Both GDPs will bounce back to 2019 levels in 2021. This will be touted a bit too much as it only gets us back to 2019. 2022 will be a year of lift-off.
There will be pockets of recovery and pockets of collapse. The airline industry will not get back to 2019 levels of passenger load until three to four years from now. Hotels will continue to suffer. In addition, I predict that close to 50% of the 40,000 total movie screens that were open for business in 2019 will have closed their doors by the end of 2021. Inevitable creative destruction accelerated by the virus.
A true silver lining of 2020 was the CARES act and unemployment benefit. This illustrated the validity of the Universal Basic Income [UBI] highly touted by Andrew Yang when he was running for president. I have long felt that countries will move to some sort of UBI in the 2020s. We now see that it really works.

Politics and Government

2020 was clearly a loud, divisive and angry year for politics. The divisions in America will continue, but will not be nearly as bad in 2021.
A clear issue is the two senate run-off elections on January 5 in Georgia. If the Democrats win both, there will be less gridlock and divisiveness. If the Republicans win one or two, then gridlock continues. So much needs to be accomplished for the economy and public health, that if gridlock occurs, Biden will first try to get Congress to work in a bipartisan manner. If that doesn’t work, he will pull out President Truman’s playbook (who successfully railed against the “do nothing Republicans”. The pain and suffering of the American people will be plain for all to see, and Congress will be compelled to work together.
There is a real question concerning the future of the Republican party. It is obvious that it is now the Trump party. There is a schism between the 126 Republican members of Congress who stood up to overturn the cleanest, most secure election in our nation’s history, and most Republican governors and the remainder of Republicans in Congress who refused to violate their oath to the Constitution. It will be difficult for those 126 to face voters and tell them that their votes didn’t count. Many of them will walk back their pro-Trump action, as he will be gone. If the Democrats win the two seats in Georgia, there may be some defections from the Republican caucus to the Democratic party.
Trump’s recent end game of being a petulant jerk, golfing while millions wait in unemployment and food bank lines, will stay with him. His sabotaging of the Republican party members in Congress. My sense is that this unseemly exit with all his golf , pardons, incurring the anger of Republican Senators and not doing any work during the worst cyber attack in our country’s history, will not be something he can shake
The outcome of the 2020 election and the huge win by Biden shows that America is mainstream middle of the road… slightly left center on some issues and slightly right center on others. The Democrats will be ill-served by the progressive wing of the party if they don’t give Biden time to right the ship. We are a middle of the road country. Neither Trumpism nor left-leaning progressivism is where the country will be in 2021.

The next several columns will take a deeper look into 2021. More industry sector predictions and the big overarching dynamics and trends that are shaping what is happening and what will hap