Don’t even try to forecast the future! If there’s one thing we’ve learned from this mind-boggling year, it’s that our ability to make accurate forecasts is highly unreliable. I remember several panels of experts last January making predictions about 2020: With the exception of possible uncertainty resulting from the presidential election, they were very positive about the prospects for this year.
‘Nuff said about that.
There’s an old Yiddish saying, “Man plans and God laughs.” Nonetheless, we’re going to keep making predictions. We can’t help it. It’s just about impossible to function if you have no vision of the path ahead. So, at the risk of looking like an utter fool a year from now, I’m going to share my view of what this coming year, at least the first part, will be like. And to hedge my bets, I’m backing these predictions up with the support of Justin Lahart in The Wall Street Journal, who wrote of expecting similar outcomes.
Just keep in mind that I originally titled my newsletter The Cautious Optimist. So you know my bias.
The economy’s trajectory in Q1 will be first really bad, then really good. The COVID numbers will likely be horrifyingly high over the next couple of months, depressing markets and production. But by March, a combination of warmer weather and the likelihood of improved testing, mask mandates, more people recovered with antibodies, and millions of people vaccinated should bring us through the worst of this pandemic.
That will lead to a rapid turnaround in behavior. Service businesses will see increased demand. People will resume travelling to see the friends and family they’ve been missing so badly. Schools will open up. And as people experience more hope, they’ll start spending more money.
Of course, the pandemic and its economic impact won’t be completely over. Millions of people will still be out of work, and many more will be experiencing serious financial difficulties. But as Lahart concludes, “Things will look better than they do now, and that will be a start.”
To which I respond with another old Yiddish saying, “From his mouth to God’s ears!” Here’s to a strong, prosperous, united, peaceful, healthy 2021!