Ah, who could have predicted that a global pandemic would hit the U.S. economy in 2020?  Last year, I titled my predictions post “Storms Clouds Gathering” but who could have guessed that it would be a full blown hurricane! Fair to say, my predictions for last year were way off.

Here were my macroeconomic predictions for 2020:

  1. The stock market will fall 5%. Not enough to scare people but the bull market is now over in this new decade. I was wrong. Despite the pandemic, the Dow gained 7% in 2020 (with a lot of ups and downs)
  2. The Fed will not touch interest rates in 2020 for fear of political fallout. I was wrong. Because of the recession, they lowered it to .25%.
  3. The real estate market will fall by 5%. Fewer buyers will drop prices in major urban cities. This was a mixed bag. As a result of the pandemic, home prices actually rose in places outside major cities as people flocked to more rural (and warmer) areas. Commercial real estate decreased drastically in value.

My predictions for 2021:

  • COVID- 19 spikes state to state will happen until the summer. Not much will change in how business is done until then.
  • COVID- 19 vaccine distribution will be slow and uneven state to state, but by the middle of the summer, anyone that wants a vaccine will be able to get it. By September, over 50% of the United States will be vaccinated. This will change consumer behavior finally in the fall of 2021.
  • With the economy in recovery, the stock market will continue to rise 10% in 2021 as the Fed keeps interest rates near zero percent.
  • The value of residential real estate will rise outside of major cities as mortgage rates remain historically low.

For small business, my predictions are:

  • There will be no going back to “normal “ for in person and traditional contact businesses like restaurants and bowling centers. They will continue to need to find ways to reimagine their companies through most of 2021.
  • Trade shows will be very small with many restrictions in most states starting the summer of 2021. In the Fall, vaccinated people will begin to attend.
  • Most meetings will still be on Zoom or another video conferencing tool.
  • Most employers will not have their team back to the office on a full time basis this year. Offices will begin to open in the fall, but it will be voluntary.

What do you predict for 2021?