A Soft Landing Is Starting to Look Much More Likely
For many months, economic forecasts have been increasinly dark due to increased unemployment and an economy that has been in a state of total or partial lockdown. With the news of a vaccine on the horizon, however, a soft landing for the U.S. economy is starting to look much more likely.
In 2020, U.S. Gross Domestic Product (GDP) has fallen a staggering 6.5% from the fourth quarter of 2019. This is the worst decline since the Great Recession of 2008/2009, when GDP fell by 8.4%. With total unemployment claiming 13.3% of the U.S. workforce, compared to 4.4% in 2019, it’s little surprise that the economy has taken a severe hit.
Fortunately, the U.S. has now secured a vaccine in Pfizer/BioNTech, which the US Food and Drug Administration (FDA) has approved for use in the U.S. Furthermore, the U.S. could receive its first shipments of a second vaccine, Moderna, as early as December 21st. With these vaccines, the U.S. can start to look forward to a much needed economic recovery.
A range of economic indicators are already beginning to show that a soft landing may be about to occur. One of these is the housing market, with sales of existing homes reaching their highest level in 14 years. Moreover, home values are showing a healthy increase compared to before the Covid pandemic. As people spend more time at home, coupled with record low mortgage rates, housing demand has continued to gather momentum.
The shape of the economic recovery is starting to take shape, too. With an increased willingness among the populace to adjust to the circumstances, most notably by working and socializing remotely, businesses have been able to restart operations. This, in turn, has enabled businesses to retain employees and provide a much needed level of financial certainty.
In short, there is hope that with the implementation of the vaccines, the U.S. economy can begin to rebound and a soft landing can be achieved. This would result in a more moderate decline in economic activity, as opposed to an all out plunge, and a return to a more stable economic footing.
Now that a vaccine is in sight, the soft landing of the U.S. economy is looking increasingly plausible. As businesses and the workforce adjust to the new normal, the economic landscape can once again begin to take shape and the U.S. can onward to a more positive future.
