The highly anticipated arrival of vaccination programs has loosened COVID-19’s clasp on global economic activity, which muddled through last year in fits and starts.
Despite the emergence of new, more contagious variants and a third surge of infections in some advanced economies, economic data released since the beginning of this year broadly suggest stronger-than-projected momentum sustained by a rebound in manufacturing, vaccination-enabled healing of the service sector, and ongoing recovery in global trade.
Barring another mutation of COVID-19 into a more virulent variety, U.S. economic output will likely reach its pre-pandemic level before the end of this year, well ahead of the rest of the world. As the pandemic recedes and businesses fully reopen, people will eagerly cast off last year’s shackles and sprint towards familiar norms. Still, nearly every one of the nation’s 331 million people had their lives altered in ways that will likely be permanent.
By the numbers, the domestic economic outlook certainly appears upbeat: 100 million vaccine doses have been administered to nearly one-fifth of the population; the domestic composite Purchasing Managers Index clocked in at nearly 60 for the month of February—well into expansionary territory and notably ahead of many advanced economies, initial jobless claims have receded, and job openings are growing.
In mid-March, one of the Federal Reserve System’s daily measures of domestic economic activity and mobility briefly revisited its year-ago level for the first time, hinting that the nation’s vast economic resources are itching to rev onward, even as some industries—movie theaters, sports venues, amusement parks—still face a protracted climb.
At first, it seemed like it would last only a short while; then it morphed into the way things were. As the novel coronavirus lost its novelty, households reinvented how they dine, travel, socialize, work, dress and entertain. The changes—some great, some trivial—continue to percolate through the economy and are certain to anoint winning firms that profitably serve the newly emerging landscape of consumer preferences and demands.
Thus, despite its overall positive momentum, the economic recovery will remain bumpy and end in this “new” normal. Some workers need never revisit their past commutes as many global firms have formally extended and expanded telecommuting policies. Many office spaces will be refurnished, restructured or entirely repurposed. Face masks, social distancing, reduced business capacity and travel restrictions will linger for months as the rest of the world catches up in its vaccination efforts.
Globally, the recovery’s strength will differ significantly among countries, dictated by their uneven access to medical interventions, the effectiveness of policy support, exposure to international spillovers and structural characteristics entering the crisis. Still, from a bird’s-eye perspective, the global economy entered 2021 on stronger footing, with vaccination programs clearing a path to herd immunity at a faster pace, and global trade surging and preparing to cater to the whims of the new economic landscape.
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