Skip to content

What a Vaccine Could Mean for 2021

2. Online shopping. The trend away from brick and mortar stores was entrenched before the pandemic, but online shopping and home delivery received a major boost from the pandemic. This trend has accelerated in a powerful and permanent manner. There will be a place for some physical storefronts, partly as showrooms for online shopping, yet many stores will never re-open. Commercial real estate will take years to adjust.

3. Allocation of consumer spending. Consumers will travel again. There is pent-up demand for tourism experiences. Consumers have been buying home furnishings during the pandemic shutdown. With a vaccine, the desire for social activities may reignite spending on clothing and fashion. Restaurants will be popular again, but not necessarily in the same locations, given the challenges to downtowns and the opportunities in the suburbs. Climate permitting, outdoor dining will remain extremely popular, so new restaurants will be designed differently.

4. Lingering effects of financial distress. Commuter railroads and transit systems are in dire financial condition. They will need massive federal assistance to return to pre-pandemic service levels, but the demand may not return all the way back. State and local governments will have to layoff thousands of workers unless they receive federal assistance, as their revenue streams will take three to four years to recover, even with a vaccine.

5. Inflation. The pandemic caused elevated unemployment and dampened overall demand. Central banks expanded their balance sheets to accommodate fiscal policy expansion in a new world of Modern Monetary Theory. Assuming more fiscal stimulus and continued buying of government debt by central banks, there will be an open debate about whether inflation fires are being lit, or not.

6. Globalization. The pre-pandemic trade tensions were a headwind for global trade. The pandemic at first accelerated that trend as China shutdown. China, however, had the virus first and beat the virus first, emerging with a strong economic recovery and more influence in the changing global order. We are also seeing changes in currency payments reflecting the growing importance of trade diversification, with the euro catching up with the US dollar as payment currency.

Without a doubt, 2021 will be a fascinating year of transition – and, we hope, recovery.

Read original article: https://cattlemensharrison.com/what-a-vaccine-could-mean-for-2021/

By: CME Group

Posted in ,