A year after the coronavirus pandemic first drove the US economy into the deepest downturn in generations, indicators suggest a strong rebound, with a host of new opportunities placing the country as the front runner in a global recovery.
More than two million Americans are now receiving the vaccine each day, with the number of cases and hospitalizations in decline. As a result, the US economy is rebounding faster than expected from the pandemic induced recession, but what exactly will this recovery look like, and who is most likely to benefit?
According to the International Monetary Fund, the United States' GDP is estimated to expand by 5.1 percent this year, after contracting by 3.5 per cent in 2020 as the pandemic forced lockdowns that shut the doors for most businesses nationwide.
Some analysts think the growth rate could accelerate further, taking into account the nearly US$3 trillion in government stimulus programs that have been put in place, including a US$1.9 trillion package signed into law this month.
Many forecasters think that this influx of funds could push GDP growth as high as 6 or 7 percent, though there are concerns that prices could spiral higher as inflation takes hold. The Federal Reserve has said that the inflationary spikes in coming months are unlikely to last, giving forecasters further reason for hope, and the Fed has also pledged to keep interest rates low until employment recovers.
With the reopening of businesses, many of which have successfully adapted to new COVID-19 restrictions, the country has already regained about half of the 20 million jobs lost in the early weeks of the pandemic. The remaining 10 million jobs come from the hardest-hit service sectors like hotels and restaurants.
These jobs and hours will not likely come back until the vaccine rollout reaches a critical mass of Americans, allowing people to resume normal activities without fear, so businesses and schools can fully reopen.
The aid and stimulus have been critical to bridging COVID-tainted waters, stemming employment losses and setting the scene for the more robust recovery still to come. Biden's stimulus plan is estimated to create 7.5 million jobs this year alone.
Which sectors are thriving?
The housing market, which was already strong before the pandemic, paused only briefly before roaring back hotter than before. Fueled by rock-bottom mortgage rates – and with remote work motivating many workers to move out of congested areas – sales of new and existing homes have jumped about 20 per cent above the pre-pandemic level.
Manufacturing has also recovered steadily since last summer, although output remains below where it was in early 2020.
And while consumers have been forced to curtail activities, they haven't been shy with their wallets, spending freely on cars, electronics, furniture, and building and gardening supplies. Online retailers have perhaps been the biggest winners, with a sales increase of just under 30 per cent over the year.
The most visible impact of the recession is in the travel, hospitality, and entertainment industry, which will likely come back to life quickly once people can take vacations and enjoy concerts, movies, or plays.
Going forward, it will be the world of business that will see the most potential growth, especially considering that it's already shot ahead about five years due to the usage of Zoom.
Research from McKinsey compares the current situation to the post World War 2 economy over 70 years ago. One of the essential features of the strong and deep economic performance after World War II was strong productivity growth - 2.8 per cent a year from 1947 to 1973.
Part of this growth can be attributed to the private sector adopting the technology developed in wartime to boost commercial ventures, while the government helped expand human capital and infrastructure.
Another McKinsey survey published in October 2020 found that companies are now three times likelier than before the crisis to digitally conduct at least 80 per cent of their consumer transactions. Pre-covid, it had taken a decade or more for new technologies to penetrate the workplace. Now, the hope is that the need to react to the COVID-19 pandemic might accelerate that process, setting the United States up for a major productivity surge.