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Analysts’ Economic Projections
Many analysts upgraded their 2021 GDP and unemployment forecasts after Democrats won both Senate races in Georgia, saying that the Senate will have enough votes to push through programs to support consumers, businesses and the economy. Goldman Sachs (GS) now projects GDP growth of 6.4% in 2021, up from 5.9% previously and well above consensus estimates of about 3.9%. That faster growth should translate to more hiring and less firing. Morgan Stanley now anticipates GDP growth of 5.9%, based on the likelihood of further stimulus and fiscal expansion. GS is projecting another $750 billion in fiscal stimulus in February or March, including $300 billion in stimulus checks, $200 billion in aid to state and local governments and $150 billion in additional unemployment benefits. In addition, economists and policy analysts do not expect Democrats to enact dramatic tax hikes that would threaten the recovery, and also expect them to invest in infrastructure. Vaccinations are Good for Business Getting America vaccinated is one thing the entire business community agrees on. The faster people are vaccinated, the faster the country will be able to return to a semblance of “normal” and the easier it will be to keep employees safe and businesses open. A number of large companies, including Walmart, Starbucks and Microsoft, are teaming up with local government and medical providers in an effort to get coronavirus shots into more people’s arms as quickly as possible. The new Biden administration has a goal of one hundred million shots in the first 100 days, and 300 million by summer, which would theoretically be enough to ensure some degree of herd immunity by fall. These public-private partnerships could speed up distribution and delivery. Walmart has been quietly preparing to offer vaccine at their 5,000 US locations, including Walmart stores and Sam’s Clubs. They have reportedly built a new digital scheduling tool to make appointments easy and are partnering with states and federal agencies while they await allocations. In late January, Walmart started vaccination programs in seven states, the city of Chicago and Puerto Rico. Walmart expects to deliver between 10 million and 13 million doses per month in both pharmacies and at events in underserved communities. Walmart reports that 150 million people visit Walmart stores each week, which puts them in a unique position to reach people. States are partnering up as well. In Washington state, Governor Jay Inslee announced a public-private partnership with Starbucks, Microsoft, Costco and other Washington companies to deliver vaccines. The state of Florida has partnered with grocery chain Publix, which serves three southern states. Amazon partnered with a Seattle hospital to offer pop-up clinics to the public. In addition, Amazon has an agreement in place with a healthcare provider to administer vaccines at their facilities as soon as doses are available. Amazon CEO of their worldwide consumer business, Dave Clark, personally contacted President Joe Biden to say that they stand ready to leverage their operations, information technology and communications capabilities and expertise to assist the administration’s vaccination efforts. Uber and Lyft have also offered logistical assistance and free rideshares, and many companies are putting policies in place to give employees paid time off to get vaccinated. Even the NFL has gotten involved, with 7,500 vaccinated health care workers getting free tickets to the Super Bowl in early February to promote vaccinations. Consumers Can Skip Returns Some retailers, including Amazon and Walmart, are using artificial intelligence to decide whether it makes economic sense to process a return. For inexpensive items or large ones that would incur hefty shipping fees, it is often cheaper to refund the purchase price but let the customer keep the product instead of sending it back. Companies say that they carefully analyze return behavior in order to identify anyone who might be taking advantage of the system. The number of ecommerce packages that were returned in 2020 jumped 70% from 2019, according to Narvar, a company that processes returns for retailers. It’s estimated that ecommerce returns could total as much as $70.5 billion for this past holiday season alone, a 73% jump from the previous five-year average. After handling a record three billion packages during the holiday season, including some two million packages that arrived late, the USPS is now getting inundated with packages that need to be returned. UPS expected a 23% increase in returns for the first week in January, but FedEx said returns volume had actually dropped slightly, possibly because much of the online shopping surge in 2020 was essential goods. Tech Trends 2021 USA Today issued their annual tech predictions for the year. In addition to smarter smart phones, speakers and TVs, they’re predicting that Gmail will soon go to a paid subscription program. As of June 1, Google will no longer allow users to upload photos and videos to Google Photos for free. Microsoft and Yahoo still offer free email, but it’s loaded with ads, and people are encouraged to upgrade to premium versions to go ad-free. Yahoo will no longer allow people to automatically forward email from Yahoo Mail without paying an annual fee of $34.99. 5G will continue to be a buzzword for faster wireless speed but won't really deliver until late in 2021. The number of Zoom and video meetings will continue to grow and meeting remotely will become more popular. While business travel may eventually resume in some fashion later in the year, many companies have welcomed the lower costs and broader reach that come with virtual meetings. Some tech prognosticators believe Amazon may make a bid to acquire Zoom. Zillow Home Design Trends Home trends for 2021 have been heavily influenced by the pandemic, which has profoundly changed the way many people live and work. Zillow recently fielded several surveys and released results: Home offices are here to stay. In fact, a desire for a home with a dedicated office instead of a corner of the family room or basement topped the list of reasons Americans working from home (even occasionally) would consider a move. Zillow reports that the number of listings mentioning home office or Zoom room increased 48.5% from 2019. Outdoor Spaces are in. People want to create a vacation feeling without leaving home, so amenities like swimming pools, outdoor kitchens and fire pits, entertaining and play spaces and waterfront and park-side property are in high demand. Intergenerational living will rise in popularity, Zillow predicts, as both young adults and grandparents move in with family for financial and health reasons, or to provide live-in help for multitasking moms and dads. Upgraded kitchens are once again popular, as people returned to cooking, baking and entertaining themselves at home. Big islands that allow for social distancing are also very popular. Fitness space is a big plus, because many people are either reluctant or unable to go to gyms and classes. Zoom rooms can often double as personal workout space. Pet-friendly homes are even more popular than usual, as work-flexibility made it easier for people to add pets to the family. Pet-friendly rentals are on the rise, with Zillow reporting that 73.1% of rental listings allowed pets, and there are more home listings featuring fenced yards, dog showers and pet entries. Amazon’s Growing Advertising Business Amazon’s advertising business, which reports in Amazon’s “other” business unit segment, has been growing faster than Amazon's retail, cloud computing and Prime subscription divisions. Amazon can offer advertisers highly valuable data that shows them how effective every dollar spent is, and provide more than two decades of insight on the actual buying habits of consumers, not just their web browsing habits. Several studies have shown that people are increasingly searching for things to buy directly on Amazon, rather than starting with Google. There are more than 200 million unique visitors to Amazon sites every month. Amazon’s sponsored posts program is a sore spot with advertisers, because companies can pay to appear above a competitor, even if the customer has searched for a specific brand name. In addition, companies that don’t actually sell products on Amazon are anxious to be able to tap into Amazon’s purchasing data to help them target the right people. Companies such as auto makers and insurance companies say they can use purchase behavior to identify consumers who might be in the market for their products or services. This year Amazon is expected to account for 10.2% of US digital ad spending, versus Facebook’s 23.5% and Google’s 29.8%. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval. |
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