Consumers and the Economic Outlook - US - January 2021
Overview
 
What you need to know 
With the current state of the US economy in slow recovery amid the pandemic, consumers across the nation have experienced a wide array of financial hardships. For some, COVID-19 has positively impacted their finances as they dine out and travel less, partly due to state-imposed restrictions. For others, the pandemic has resulted in job loss or a reduction in hours or wages, further hampering their financial health in already turbulent times. Despite this, some consumers remain upbeat on their financial situation going into 2021. With a vaccine available and a new US administration publicly committing to containing the virus, many remain hopeful going forward. For others, they simply hope things don’t get worse at this point in time.

Key issues covered in this Report
●	Impact of COVID-19 on consumers’ household finances
●	Sentiment toward consumers’ future financial health
●	Change in consumer spending habits 

Definition 
For the purposes of this Report, the following categories of consumer finances are explored:

●	Outlook on consumers’ future financial situation
●	Positive and negative impact of COVID-19 on consumers’ household finances
●	Consumers’ past and future spending habits

COVID-19: market context
This Report was written in early 2021. Data was fielded in November 2020 and thus reflects the behaviors and attitudes of consumers during the re-emergence stage of the pandemic.

The first COVID-19 case was confirmed in the US in January 2020. On March 11, the World Health Organization declared COVID-19 a global health pandemic, and on March 13, President Trump declared a national emergency in the US.

Across the US, state-level stay-at-home orders rolled out throughout the months of March and April, remaining in place through May and in some cases June. During this time, referred to as lockdown, nonessential businesses and school districts across the nation closed or shifted to remote operations.

During re-emergence, all 50 states have relaxed stay-at-home orders and allowed businesses to operate with varying levels of social distancing measures in place. The continued spread of COVID-19 infections has driven some states to slow down or reverse course on reopening plans. Mintel anticipates the US will remain in a state of flux through 2021, until a vaccine is widely distributed.

Economic and other assumptions
Per Congressional Budget Office projections from February 2021, unemployment will fall to 5.3% in 2021 before improving further over the next five years to reach 4% in 2025. Real GDP is expected to make a swift recovery and return to pre-pandemic levels in mid-2021, while continuing to average a 2.6% growth until 2025. Additionally, inflation is expected to incrementally rise over the next few years, going up to 2% sometime after 2023 – in part due to the Federal Reserve continuing its pledge to keep interest rates near zero through 2023. These projections are assuming that no additional fiscal stimulus is provided – overall, a much more optimistic outlook than the previous forecast from July 2020. The CBO attributes these projections to the first stage of economic recovery being stronger than anticipated, as well as businesses becoming more flexible in adapting to state restrictions. Additionally, these projections take into account vaccinations reducing COVID-19 cases and allowing the labor market to recover at an even quicker pace – returning to pre-pandemic levels sometime in 2022.