Choosing a topic for today seemed like a no-brainer with all that’s going on in our country right now – the election, the Capitol riots, Trump’s latest impeachment, the inauguration, the transfer of presidential power, what the Biden administration plans to do, the Dems’ control of both houses of Congress and the White House, etc., etc.

But you know what? I don’t really want to write about any of those topics. To me, they are kind of old and boring and overplayed in the media at this point. So today, let’s focus on something different: the economy.

In Tuesday’s Forecasts & Trends, I discussed the fact there is near-unanimous agreement among well-known forecasters that we’ll have a strong economic rebound in the second half of this year. I also noted there is no such consensus on what will happen in the first half of this year, with some predicting anemic growth and others suggesting a recession just ahead.

While I don’t have a crystal ball regarding what will happen in the first half of this year, let’s look at some possibilities. With the rise of COVID-19 infections, hospitalizations and deaths to new highs in recent months, anything could happen in the months just ahead.

Record Rise in COVID Infections & Deaths

As of yesterday, there have been 90,335,008 confirmed cases of COVID-19 infections worldwide since the pandemic started apprx. one year ago. Over the same period, there have been 1,954,336 deaths globally from COVID-19. Almost 40 million cases have been confirmed in the US with over 381,000 deaths so far.

As noted above, the current rate of infections and deaths are at new highs today, and experts are uncertain where we are headed just ahead. The US recorded a single-day record of over 4,200 deaths on Tuesday of this week.

Earlier this week, President Trump announced sweeping changes to coronavirus vaccine rollouts, quickly making all vaccine supplies accessible now, rather than withholding doses for patients’ second shot. He also encouraged states to provide shots to residents 65 and older immediately and cautioned states with slow vaccine rollouts that they could lose some of their supply to faster-moving states.

Making matters worse, new more transmissible mutations of the coronavirus have popped up in Britain, South Africa, and Brazil, prompting scientists to learn more about how those variants might be causing a worldwide increase in infections. On Sunday, Japan announced it had discovered yet another new mutation in four travelers arriving from Brazil.

More COVID Economic Lockdowns Ahead in the US?

Most forecasters now agree the economic lockdown of “non-essential” businesses last year was not effective at stopping the spread of the virus. They also seem to agree now that the lockdown led to the permanent closure of tens of thousands of small businesses.

As a result, most forecasters agree that a new round of lockdowns should be avoided this year. I couldn’t agree more. However, what I read this week says President-elect Biden has stacked his Coronavirus Task Force, and even some members of his Cabinet, with politicians who are largely not opposed to another round of economic lockdowns.

At this point, it is impossible to know if another round of lockdowns is likely just ahead. Let’s hope not, but it very likely depends on how much worse the pandemic gets before the vaccines get ahead of the epidemic. We’ll just have to see.

Early 2021 Economic News So Far is Not Encouraging

Here at mid-month, there is not a lot of economic news so far in the New Year, but what we have seen is not encouraging. Initial claims for new unemployment benefits announced last Thursday were higher than expected.

The unemployment rate report for December was discouraging. The Labor Department reported Friday that nonfarm payrolls fell by 140,000 last month. That was worse than expectations for a drop of only 50,000 jobs from economists surveyed by Dow Jones.

Job creation came to a halt in December as restrictions brought on by surging COVID-19 cases hammered virus-sensitive industries, particularly bars and restaurants, which lost nearly half a million positions. Fortunately, the official unemployment rate held steady at 6.7%.

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As noted above, job losses were worst in the hospitality industry which saw an additional plunge of 498,000 jobs last month. Overall, hospitality is down 3.9 million jobs since January 2020, a 23.2% drop, the Bureau of Labor Statistics report showed.

In conclusion, it remains to be seen if we will experience a double-dip recession in the first half of 2021. As usual, it will depend on consumer spending which makes up almost 70% of Gross Domestic Product. With COVID infections and deaths at new highs, I am not optimistic consumers will open their pocketbooks in the months just ahead.

Yet if the current COVID surge does not get out of control, and we get a handle on the virus by mid-year as many forecasters expect, we may avoid a recession in the first half of this year. That remains to be seen, of course. I’ll keep you posted, as always.