Today is not just another day on the calendar, and not simply because it’s the first day of a new month. It’s a special day for accountants and economists because it begins the second half of the year and the first day of the third quarter. That last part is significant because this is the first new quarter since January of 2020 when you can legitimately be optimistic about our economic future.
We were close to that feeling when the second quarter of this year began in April, but not quite there. The coronavirus vaccines were still being rolled out and we didn’t know if they would deliver as advertised.
They have. The summer of 2021 is completely unlike the summer of 2020. A year ago, the pandemic was slowly settling over our lives and economy, smothering jobs and businesses like a wet blanket. It was finally sinking in to most of us that we were in the middle of a real mess and it would be months — or years — before “normal” returned.
Well, we made it back, and sooner than expected. Consumer confidence — the real driver in our economy — is at its highest level in nearly 1½ years. People just feel better about our future, which means they will go out and spend money. They will eat at restaurants and go to movies — and take on bigger ventures like a vacation or cruise. Employers feel confident in rehiring employees because they finally have enough customers to keep them busy and still turn a profit.
The stock market — an imperfect barometer of the economy — is doing pretty good and even flirting with record-setting territory. The three major exchanges — the S&P 500, the Dow Jones Industrial Average and NASDAQ — are trending up after a brief scare about inflation brought them down.
Oil is even back up to $72 a barrel, and there is giddy talk that it will reach $100 later this year. (Don’t believe that, thought the short-term future for petroleum is pretty solid.)
The housing market remains red-hot, almost too warm for many consumers. If you’re in a position to sell, congratulations. You will make a nice profit. If you’re trying to buy, I hope you’ve got some cash.
The unemployment rate, another key statistic, is down to 5.8%, which is frankly amazing considering all we have been through. Some economists didn’t think it would be below 6% until the fall, and anything in the 5% range is basically full employment, which means that most people who want a job can find one.
Twenty-six states — all but one led by Republican governors — are even ending $300 weekly federal unemployment benefits before their Sept. 6 expiration date. Jobless people in those states are still receiving their state unemployment benefits, but that federal boost often resulted in combined benefits that were greater than their working income.
States recovering quickest from COVID-19
Rank - State - Total weighed score
1) Iowa - 75.25
2) Nebraska - 73.05
3) Alaska - 72.18
4) South Dakota - 68.99
5) New Hampshire - 65.31
6) Utah - 64.81
7) Kansas - 64.61
8) Connecticut - 63.68
9) Arkansas - 62.11
10) Idaho - 61.63
37) Texas - 51.26
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48) Louisiana - 48.30 Source: WalletHub.com |
Because of that, when those federal benefits end soon, the unemployment rate will drop again when many of those people go back to work. And for the most part, jobs are there for them. Some employers are even increasing pay and adding perks to lure workers back.
So, what could go wrong? Well, probably nothing, but of course nothing is guaranteed in life. The recovery will probably keep gaining momentum and produce a booming economy by this fall. The Christmas shopping season should be strong.
The main thing to keep your eye on is inflation, which is happening because Congress is pumping billions of dollars of (borrowed) money into the economy. That started in President Trump’s last year to prevent the recession from becoming a depression, and it worked. Then when President Biden took over, the numbers were still lagging and another infusion of cash went to unemployed people and struggling businesses. We’re at the tail end of that cycle now, and it has basically worked.
The other thing to watch is the cause of all this worry, the coronavirus. If it keeps fading, the recovery will not falter this year, and 2022 could be a barn-burner. There is some concern about the delta variant of the virus, which is causing new outbreaks in some U.S. states and some foreign country. But so far — knock on wood — the pandemic is headed in the right direction (down).
But just as all politics is local, so is all economics. If you have a good-paying job, you’re probably in good shape. Ditto if you’re a business owner and you’re making a profit again. But plenty of people lost jobs last year and have not recovered financially, and too many businesses closed their doors forever when the lockdowns started. Their recovery has not yet kicked in, and we should not forget about them.
If you can, however, enjoy the summer — and keep your fingers crossed. Optimism is in order, and it’s been a long time since employees and employers could say that.
TTaschinger@BeaumontEnterprise.com