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Outlook 2021: Can the Economy Continue to Recover?

Michelle Meyer, head of U.S. Economics for BofA Global Research, highlights several positive economic signs to watch for in 2021. View this video for more insights.

Outlook 2021:

Can the Economy Continue to Recover?

With

Michelle Meyer

Head of U.S. Economics,

BofA Global Research

Please see important information at the end of this program.  Recorded on 12/01/2020.

[ON SCREEN TEXT]

Michelle Meyer

Head of U.S. Economics

BofA Global Research

Twenty twenty was a challenging year, to say the least. The economy underwent a significant shock as a result of the COVID pandemic. The recovery was robust. We started to see some real significant progress in healing in the spring and we think the economy will continue to recover, will continue to heal in 2021.

[ON SCREEN TEXT]

Helping the Economy Heal

·         Support from fiscal stimulus

Importantly, we expect support from fiscal stimulus, which is likely to be passed in the first quarter, really targeting the parts of the economy that have been hit the hardest.

Those that are still unemployed, small businesses to some extent, state and local governments as well. And that should make a big difference in terms of generating stronger economic activity early next year.

[ON SCREEN TEXT]

Helping the Economy Heal

·         Support from fiscal stimulus

·         Success of the vaccine

Of course, another critical component will be the vaccine, how quickly the vaccine is distributed, how effective it is, and how much that will change consumer behavior. At what point will consumers feel comfortable re-engaging in activities that they didn't before when the COVID pandemic remained a significant threat.

So there will be a big question as to how much pent up demand there will be for services, for travel, for restaurants, for theater, and how quickly those industries are able to bounce back. And I think a lot of that will depend on the success of the vaccine.

Now, where are the bright spots for 2021?

[ON SCREEN TEXT]

Helping the Economy Heal

·         Support from fiscal stimulus

·         Success of the vaccine

·         Consumer spending

Well, I think a lot of it still has to do with the consumer. The consumer has been a driving force in this recovery, being a recipient of a lot of government aid and support and spending that money and that really rippling through the economy.

So the extent to which the consumer continues to spend and unleashes some of this pent up demand, I think, will be a really interesting aspect of 2021.

[ON SCREEN TEXT]

Helping the Economy Heal

·         Support from fiscal stimulus

·         Success of the vaccine

·         Consumer spending

·         New business investment

We also can see continued innovation and changes when it comes to business investment. Businesses have been investing in new technologies in order to adapt to the COVID pandemic and the extent to which that continues, I think, will also have an important influence on the trajectory for 2021 and beyond.

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