People are ready to regain a sense of normalcy, and if we learn anything from history, it’s that the periods immediately after a crisis are among the most productive eras throughout history, such as the Golden Age of Capitalism of the 1950s and 1960s. Businesses showed tremendous resilience throughout the past year, adopting new processes and technologies and transforming how many businesses operate. Fueled by stimulus checks, vaccinations, and re-openings, the economic recovery has arrived.
Moving forward, business leaders will need to shift from reactionary decision-making to a more proactive approach. Rather than merely handling day-to-day challenges, as they have for the past year, constantly forced to make on-the-spot decisions, it’s time for business leaders to begin to look towards the future. It’s time to stop reacting to problems as they arise, merely grinding through daily decisions, and start making plans for how to shape the future of their organization. To thrive, businesses need a plan for economic recovery.
What is an economic recovery?
Economic recovery is the stage of the business cycle following a recession and is characterized by a period of improving business activity. Typically, during an economic recovery, businesses adapt to new circumstances, incomes rise, and unemployment falls.
The Economic Forecast
A period of economic growth is just starting and is expected to continue throughout 2022. According to the Bureau of Economic Analysis, the US Gross Domestic Product (GDP) increased in all 50 states in the fourth quarter of 2020 and as a nation, increased 4.3 percent year over year.
Now, the Federal Reserve is boosting its estimates for economic recovery, forecasting that the GDP will grow 6.5% this year, an increase from their previous forecast of 4.2%. Bank of America economists likewise boosted their forecasting estimates, now predicting GDP growth of 7%, up from a previously predicted 6.5%. In fact, Goldman Sachs, Morgan Stanley, and UBS have all increased their predictions for GDP growth in 2021.
Annual GDP growth of 6.5% would make 2021 the strongest year in over 30 years. Not only that, but the Federal Open Market Committee (FOMC) is also already predicting GDP growth of 3.3% in 2022. Additionally, the Federal Reserve estimates that the unemployment rate will fall to 4.5% in 2021, which is lower than their previous estimate of 5%. These stronger numbers are also reflected by the Congressional Budget Office (CBO) who anticipate, “real GDP expand[ing] rapidly over the coming year, reaching its previous peak in mid-2021 and surpassing its potential level in early 2025” and “In CBO’s projections, the economy continues to expand from 2026 to 2031.”
Invention and Innovation
What is contributing to this massive economic recovery? In addition to the stimulus checks and vaccinations, the digital transformations that companies underwent are continuing to shape their economic recovery.
“Necessity is the mother of invention,” a well-known proverb generally attributed to Plato, can certainly be applied to business leaders over the past year. The crisis that organizations faced was a driving force for invention and innovation. Now those same inventions and innovations could be a driving force for an economic recovery like no other. As leadership teams had to rapidly adapt to changing circumstances, digital transformations accelerated, with changes that would generally have taken years suddenly reduced to mere months.
These inventions and innovations spanned industries and included technologies to improve remote working, digitization of customer channels, reinvention of supply chain models, telehealth capabilities, and many other advancements. Driven by a need to remain competitive, create contactless solutions and virtual interactions, these advancements prove to be a worthwhile investment as they have accelerated many businesses’ long-term digital strategies. Moving forward, businesses will continue to use these technological advances for increased productivity, job creation, and overall business growth.
Doors Are Reopening
As restrictions decrease, business is increasing. As doors reopen, businesses have to plan on a massive consumer rebound as pent-up demand is unleashed. While an increase in consumer shopping is a staple of every economic recovery, in this case, a large number of different industries have been affected, and shoppers are anxious to return to the things they enjoy.
Greater savings, unprecedented stimulus, and increasing numbers of vaccinations combine to create a wave of consumer spending. Not only are air travel reservations surging, retail sales climbing, and restaurant dining rising, but that money is beginning to flow into all areas of the economy. You can make the most of economic recovery and stay ahead of your competitors with the right plan.
The 2021 economic recovery is unfolding, and business is coming back fast. At Safeguard, we know how important it is to have the essential products, services, and advice you need to help you manage your business more efficiently and get back to doing the things you enjoy. Talk with a local Safeguard Advisor who will learn about your unique goals and help you with personalized solutions that fit your business. Call 855.778.3124 to get started.
- Fueled by stimulus checks, vaccinations, and re-openings, the economic recovery has arrived.
- A period of economic growth is just starting and is expected to continue throughout 2022.
- The digital transformations that companies underwent are continuing to shape their economic recovery.
- You can make the most of economic recovery and stay ahead of your competitors with help from your local Safeguard Advisor.