5 Questions About The U.S. Economy Investors Must Ask In 2021 & Beyond

U.S. Economy Showing Robust Growth for Now

At the moment, it’s pretty evident that the U.S. economy could show decent growth in the coming quarters.

How can one tell? Look at the economic data. It’s showing that the U.S. economy is waking up a bit after an awful 2020. In fact, the economic data are showing that 2020 may have just been a slight hiccup.

us economy 2021

Look at consumer spending, for example. All the statistics tracking spending say American consumers have been spending a lot of money. Keep in mind, American consumers are a major force that can make or break the U.S. economy.

See the chart below; it plots U.S. retail sales. They’re back up after a massive decline in early 2020. In January 2021, U.S. retail sales reached an all-time high.

(Click on image to enlarge)

(Source: “Advance Retail Sales: Retail and Food Services, Total,” Federal Reserve Bank of St. Louis, last accessed March 3, 2021.)

But that’s not all. If you look elsewhere, you’ll also see upbeat sentiment.

Home prices and sales have been surging. Low mortgage rates have been helping. In January 2021, sales of new homes jumped 4.3% to a seasonally adjusted annual rate of 923,000, from 885,000 in December 2020. (Source: “U.S. New Home Sales Blow Past Expectations in January,” Reuters, February 24, 2021.)

Businesses have been spending money, too. Look at the following chart; it plots the annual rate of domestic business investment in the U.S.

(Click on image to enlarge)

(Source: “Gross Private Domestic Investment: Domestic Business,” Federal Reserve Bank of St. Louis, last accessed March 3, 2021.)

In the fourth quarter of 2020, business investments came back up to a similar level as they were in mid-2019. Impressive.

Keeping all this in mind, it wouldn’t be shocking to see a period of higher-than-normal growth in the U.S. economy in the next few quarters. It wouldn’t even be surprising to see the U.S. economy grow by well over four percent in 2021.

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