2021 may feel more like an extension of 2020 rather than a fresh start. But take heart-there is plenty of good news out there.
Here are four things to be hopeful about today:
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Weapons Against The Coronavirus
First, we now have weapons against the coronavirus. The US has two approved vaccines. England, China and Russia have developed their own. Additional vaccines are under development and will likely be available later this year.
These will be game-changers if we manage to deploy them widely and quickly. Which, I admit, is a big “if.”
The initial rollout has been slow almost everywhere but Israel and, surprisingly, West Virginia.
West Virginia was the one state that did not use the federal nursing home rollout plan. They ran their own process, showing how this is really a state-by-state problem.
In time, the logistical issues in other places will get solved and people will gain confidence as side effects prove minimal.
Moreover, we will see improvement long before the “herd immunity” threshold. (Experts put that at about 70% of the US, or more than 200 million people who would have to recover from the virus.) Protecting the most vulnerable groups will reduce pressure on hospitals and hopefully let governments lighten business restrictions.
I don’t expect anything like normalcy until the second half of the year, at the earliest, but we should feel a difference sooner.
Recent Fiscal Package
Second, the recently passed fiscal package will give some relief to unemployed workers and small businesses.
The process was late-night political sausage-making at its worst. It took way too long and I dislike some of it. But had the bill not passed, I think we would certainly be looking at a double-dip recession in early 2021.
With the Democrats controlling the Senate, we will probably see more cash payments, at least an increase to the $2,000 many wanted (adding to the $600 that passed). It will aggravate an already high national debt but should also boost consumer spending, as we saw with similar payments last year.
Plus, if the vaccines do their part, people will be more inclined to spend the next round in the hard-hit restaurant, entertainment and travel sectors.
We are also likely to see a major infrastructure bill as well as additional stimulus. Again, this will blow apart any thought of budget restraint.
A Year Of Massive Innovation
Third, 2020 was (of necessity) a year of massive innovation throughout the economy. Businesses forced into an “adapt or die” position worked hard to adapt.
A disturbingly high number didn’t make it. Yelp (YELP) shows that some 98,000 businesses have closed permanently since March.
But many did survive by finding creative ways to operate under new constraints. Those investments having been made, and we can now begin to see the benefits.
I recently talked with Richard Fisher, former president of the Dallas Fed, who is on the PepsiCo (PEP) board. He noted that consumer goods companies like PEP have accelerated innovation, productivity, and brand positioning over the past nine months that would otherwise have taken five or more years.
It is not just consumer goods companies. An enormous amount of innovation has been pulled forward in a wide variety of businesses and industries.
Hundreds of teams of brilliant scientists singularly focused on one problem. The incredible discoveries they are making… and the knowledge that they have developed… will benefit scores of different fields.
We would be in a far worse position right now if not for the hard work of millions, everyone from healthcare professionals to farmers, warehouse and delivery workers, store clerks, and others who risked their health to keep society going.
Add to that list the scientists and entrepreneurs who developed the vaccines that will get us out of this and figured out how to do business in tough conditions.
US Trade Policy
Fourth, US trade policy should change for the better this year. President Trump’s tariffs—one of his worst mistakes, in my view—won’t disappear instantly.
Those tariffs disproportionately affected the very people the stimulus bills aim to help, and Biden's team is likely to ditch them.
The president-elect says, at least, he will continue taking a hard line against China’s unfair practices. He should. But I think he will be more conscious of minimizing the collateral damage to our own nation.
Look for Biden to return the US to organizations like the WTO. This will be critical as we try to get the world economy back on its feet in 2021.
Note: I am an unapologetic proponent of true free trade. But I also recognize that we need to help workers who are caught in the crossfire.
The benefits of free trade cannot accrue only to a portion of the country. They must be shared widely, even if that means government assistance for some workers for a period of time.
These are just a few reasons to be hopeful about 2021. There are probably many more. Just remember, we only have three hands.
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