January is Survey Time!!!

Anybody, everybody, and all the bots that aren’t real bodies put out survey results based on the previous year’s results or predictions for the new year.  It makes all those statistics courses worth their pain!   For our February 2021 1stTuesday Blog, we have sifted through a lot of surveys and survey reviews published in January, or thereabout.  We have broken the subjects into four categories that may be of interest to our IT and Business Consulting Services clients and the followers of our blog.  In each section, there is a review of the surveys we read over and comments on common threads, trends that seem to pop up, etc.  FYI-Governments produce a lot of statistics!

GDP AND ECONOMIC GROWTH

Looking over charts of 2020 will give you whiplash!  Straight down, straight up within months.  With only the flash 4Q2020 GDP number, we should come out with a roughly breakeven year.

Almost all predictions show a 2021 GDP growth rate above 3.0%, with an average of around 3.2%.

So What?  The social, political, and cultural roller coasters of 2020 ran over all of us.  Coming into 2021, we are a much more nimble and creative country that only needs a steady growth rate to produce amazing results.  Picture 2020 as the year we broke it and with renewed vigor and new insights will make 2021-2023 the years we build it better.

UNEMPLOYMENT & EMPLOYMENT

There are two commonly quoted stats for employment. The Unemployment Rate-The percentage of workers on unemployment and those willing to work but with no job.  This is the traditional stat.  The Labor Participation Rate is an estimate of those of working-age people not in military or institutions of some sort.  This rate has meandered around 61.5% since around 2012.

The December 2020 Unemployment Rate was 6.7%.  The Unemployment Rate monthly chart for 2020 shows graphically the ‘whiplash’ mentioned earlier.  Predictions for December 31, 2021 are for a rate of roughly 5.25%.  Predictions for December 2022 fall to around 4.2%.  The Labor Participation Rate predictions continue their meandering around the 61.5% average.

So What?  If you manage a business now, you probably are painfully aware of the shortage of the right people for your job openings.  The implications for workers of all genre seems to be to stay nimble and current in your training and jobs will be there.  For employers, search hard but have a great training program!

SPENDING

People hear the Consumer Spending number every month somewhere in the news without understanding their impact on the economy.  Spending is equal to Consumer Spending plus Government Spending.  Definitionally, both are pretty self-evident.  Combined, the cash they spend is income to someone that spends that income to create more things to sell.  Picture this as the basic, non-fossil fuel the economy moves on.

The stimulus packages of 2020 plus whatever is decided on in early 2021 will keep Government Spending higher than average.  Consumer Spending is expected to be in the 3.5% growth rate for 2021 and 2022.

So What?   Consumers spend when they’re comfortable in life.  As pandemic-related uncertainties are resolved, workers will again get comfortable and spend.  Add in the Government spending and there’s enough cash going through the economy to create the need for hiring, which starts the cycle.

INFLATION & FINANCIAL RATES

On the monetary front, the Federal Reserve indicates a multi-year policy holding steady where they’re at.  With interest rates of all sorts based on the Fed’s policy rates, indications are that credit for housing, equipment, autos, etc., should remain widely available.  The inflation rate prediction is for the upper 1% range through 2022.  We’ll see.  Labor is one powerful force in prices.  As more jobs must be filled, the cost of qualified labor goes up, forcing the price of everything else up.

A look at the financial section of any news source during 2020 was as amazing as it was amusing.  With new highs on so many indices and so many diverse companies throughout the year, one wonders where all that cash is coming from!  If the Fed holds the course for years, 2021 may be even more amazing and more amusing for market watchers.

So What? Either you are a net investor in life and business or you are a net borrower.  Borrowers seek the lowest rate possible while investors look for the highest return possible.  The rates that exist in a capital market at any time are the results of that tug of war scenario.  If you figure out which you are, borrower or investor, your priorities are set.  If residential mortgage rates are low, more people can afford houses.  More businesses are able to buy new machinery and build new workspaces to house it.

Having trouble keeping up with all these numbers? Grab a calculator below to help out!

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