Robinson Analytics 2021 Economic Forecast
Robinson Analytics has done some financial markets analysis on the top 10 economies in the world. See the chart below. The markets are currently forecasting that China’s main street economy will do the best the first 5 to 8 months of 2021, with the United States main street economy performing second best, Japan’s main street economy performing third best, India’s main street economy will perform fourth best, Canada will performed fifth best, Brazil will perform sixth best and Germany will perform seventh best. But as you can see U.K, France and Italy are going to struggle as they enter 2021. The first 5 to 8 months of 2021 could be a challenge for these countries. The world economy is currently forecast to decline by -4.4% in 2020 and grow by 5.2% in 2021. That means that the world economy would need to grow by 5.1% to recover to where it was at the beginning of 2020. My current estimate is that we are on track for the world to recover from the 2020 recession by November 2021.
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The Institute for Health Metrics and Evaluation (IHME), an independent population health research center at University of Washington, has developed some models for Covid-19 and how daily infections might model out over the next few months. See the chart below. As you can tell from the chart, they are forecasting a serious spike should easing (red line) of restrictions be done too soon. Should a full national mask mandate (green line) be implemented, they are forecasting that would really put a dent in daily infections. The current projection (purple line), is that daily infections should continue to increase and then decline the first quarter of 2021.
Robinson Analytics current United States economic growth forecast for 2020 is -2.7% and 3.6% for 2021. The policies that have been implemented over the past four years are going to propel us into spectacular growth in the new year. However, there is concern about the recent spike of Covid-19 cases, that are projected at this time to continue exploding in the first quarter of 2021, which will have an affect on the economy. We will have to wait and see how this affects growth ultimately. My current estimate is that U.S. will fully recover from the 2020 recession by the second quarter of 2022. So we still have a ways to go. Below find a table that depicts growth rates for the economy by a number of firms by quarter on an annual basis.
When I take a look at what the Standard and Poor’ 500 is forecasting for the new year, or better known at the stock market, it is telling us that the economy will be growing over the first 5 to 8 months into the new year. So it corroborates the fundamental analysis that is depicted by the above firms. So I am not estimating a decline in the economy the first half of the year at this time.
Even though manufacturing only accounts for ~11% of our economy, this sector of the economy is very important in that it is a leading economic indicator. In other words, manufacturing employment tells us whether the economy is going to contract or expand in the future. Currently manufacturing is expanding Month over Month, and this forecast economic growth as we enter 2021.
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