UCLA Anderson School Forecasts Economic Growth by Q2 2021
A good economy is on the horizon for the United States, but it’s going to take a long slog to get there, according to the “UCLA Anderson Forecast.”
The last of the year’s prominent quarterly economic forecasts was released Dec. 9 by the UCLA Anderson School of Management and anticipated two more quarters of sluggish growth. After the tough economic conditions in the fourth quarter of 2020 and the first quarter of 2021, the U.S. economy should be in store for robust growth—6 percent—in the second quarter of 2021, according to Leo Feler, the senior economist who wrote the forecast. “We expect the economy will reach its previous peak by the end of 2021,” Feler said.
The key to restoring the economy to its previous health will be widely distributing vaccines for COVID-19 and making it safe for people to gather and to work in public places, according to Feler. “Right now, the key issue is how we will make it through to an exuberant spring. These next few months will be dire, with rising COVID-19 infections, continued physical distancing and the expiration of social-assistance programs,” Feler said. “Additional, timely fiscal relief would prevent unnecessary hardship and allow the economy to maintain the structural relationships that will help us recover more quickly once vaccines become widely available.”
The current economic landscape would have seemed far-fetched in December 2019. During that period, the UCLA Anderson Forecast anticipated a steady pace of economic growth leading into 2020. UCLA forecasters predicted a 1.7 percent increase in a year-over-year comparison with the fourth quarter of 2018.
By March 2020, state and local governments were preparing to issue stay-at-home orders to slow the COVID-19 pandemic. The forecast at that time noted that the economy was entering a period of turbulence. When another report was released in June, the UCLA Anderson Forecast said that the COVID-19 pandemic had “morphed into a depression-like crisis.”
Jerry Nickelsburg, the forecast’s director, said 50 percent of the California economy’s job losses were in leisure, hospitality and retail. “The COVID-19 pandemic has created a sense of caution on the part of the general public, both within California and among tourists who might come to the state. Simply put, a significant part of the potential customers for these businesses will want to feel safe before venturing out to them,” Nickelsburg said.
By the time the third quarterly forecast was released on Sept. 30, forecasters noted that the economy was improving. The improvement was supported by the fiscal stimulus approved by Congress early in the crisis, monetary support by the Federal Reserve that the forecast called “unprecedented,” and a quick adaptation by consumers and businesses to doing virtual transactions.