The COVID-19 pandemic has upended economies across the world, and every sector and industry has been affected in one way or another. Add to the upheaval created by the pandemic a competitive 2020 election cycle, and uncertainty around the economic environment has rarely been higher. While 2020 has been a difficult operating environment for most, there are several reasons to expect a strong rebound in 2021.
An effective COVID-19 vaccine is expected to be widely available by spring 2021, allowing economic activity to normalize over the course of the year. Public policy uncertainty remains near all-time highs. The election will bring clarity over the policy environment businesses will face going forward, reducing the uncertainty that is currently weighing on the business environment. Productivity has increased this year at a rate not seen in decades as a result of COVID induced restructuring and cost-saving measures. This increase in productivity is expected to pay dividends in the form of increased economic growth in the years ahead. New business formation has been a bright spot recently as well. New business applications have surged in Q3 2020 to a record-high level and have been broad-based across all industries. This bodes well for a recovery in the labor market; historically new and younger firms have accounted for an outsized share of net new job growth.
We invite you to join us on Friday, December 11, for the Lancaster Chamber’s Economic Forecast Virtual Event for an update on the current state of the economy and our outlook for 2021. We will discuss the dynamics mentioned above, some of the potential long-term effects that may result from the pandemic, and more.