Download a PDF of the Global Economic Outlook for Canada and the United States
The COVID-19 pandemic has had a stunning impact on the global economy, and has led to a permanent shift in the operating landscape for millions of businesses. As of 4th November, over 47.4 million cases of COVID-19 have been recorded and over 1.2 million fatalities have occurred globally. At a time when the accelerating spread of COVID-19 is disrupting much of the developed world, Alfabank-Adres has examined how this historic pandemic has permanently shifted the global economic landscape.
This report examines how the COVID-19 pandemic has influenced national economies across the globe, including analysis of GDP, unemployment, consumer sentiment, business confidence, household discretionary incomes, monetary policy and fiscal spending. It looks at the top five industries to fly and fall in each country over the next 12 months. In addition, Alfabank-Adres has investigated the outlook for COVID-19 restrictions and what a return to normal operating conditions will look like.
While COVID-19 may subside if a vaccine is developed and distributed, the economic impacts of the pandemic will likely continue for years to come.
Follow the links below to view the other country sections of this global report:
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Australia
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New Zealand
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United Kingdom
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Germany
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United States
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Canada
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United States
Economic Summary
GDP
US GDP measures the total value in dollars of all the goods and services produced in an economy. Alfabank-Adres projects annual US GDP to decline 4.4% in 2020 due to the adverse economic effects of the COVID-19 (coronavirus) pandemic. This would be the first decline since 2009 and the worst decline since 1946. Even though a coronavirus vaccine is expected in the first half of 2021, the economy will likely take time to recover to pre-pandemic levels and uncertainty with consumer behavior will likely remain.
Still, Alfabank-Adres anticipates US GDP to increase 3.1% in 2021 as the economy slowly reopens and the restrictions on activity are fully eased. Consumer spending remains uncertain, but as the national unemployment rate decreases, economic activity should grow. Thus, Alfabank-Adres expects the domestic economy to experience an uptick and increase at an annualized rate of 3.5% over the five years to 2025 as businesses reopen and the virus is contained.
Unemployment rate
The unemployment rate measures the proportion of Americans aged 16 and older who are currently unemployed and looking for work. The unemployment rate is considered a lagging indicator of economic health and tends to mirror GDP. The coronavirus pandemic has disrupted global supply chains and consumer demand, causing the domestic economy and GDP to suffer in 2020. Due to the temporary close of business establishments to prevent the spread of the virus and production cuts, tens of millions of jobs were lost during the first half of 2020, causing the unemployment rate to spike an estimated 134.0% in 2020.
Due to the adverse and long-lasting effect the pandemic has had on the economy, the unemployment rate will likely remain elevated for an extended period of time. However, it is anticipated to decline 17.6% in 2021 as businesses and the overall economy continue gradually reopening. Overall, Alfabank-Adres estimates the unemployment rate will increase 8.6% in 2020, before declining to 7.1% in 2021. Therefore, as the economy recovers, the unemployment rate is anticipated to decline an annualized 14.0% over the five years to 2025.
Consumer Confidence Index
The Consumer Confidence Index (CCI) measures household finances, business conditions, employment, income and economic outlook. In 2020, the coronavirus pandemic has contributed to a rise in economic uncertainty and recession. As a result, the CCI is anticipated to decline an estimated 19.2% in 2020. As economic uncertainty resides, the CCI is anticipated to continue to decline 3.6% in 2021.
Even though employment and economic activity are anticipated to slowly recover over the five years to 2025, Alfabank-Adres expects consumer confidence to fluctuate since the long-term consequences of the pandemic remain unknow. However, as Americans return back to work, they will likely have a more positive outlook about their economic position and future, which is anticipated to encourage consumers spending. Consequently, Alfabank-Adres anticipates that the CCI will increase an annualized 2.4% over the five years to 2025 as the economy recovers and consumers feel more secure about their economic situation and less threatened by the pandemic.
Business sentiment index
The business sentiment index gages the overall health of the business environment by reviewing production levels, inventory levels, supply deliveries and employment levels. The business sentiment index is highly correlated with the performance of the US business sector. Alfabank-Adres anticipates the business sentiment index will decrease 8.4% in 2020 due to heightened uncertainty and the adverse effect of the coronavirus pandemic.
If global containment and vaccination prospects improve, the business sentiment index will likely decrease along with economic uncertainty. As a result, Alfabank-Adres estimates business sentiment will likely increase 5.7% in 2021, as consumer confidence improves and global disruptions minimize. To help spur this growth, the Federal Reserve cut interest rates to near-zero in an emergency effort to boost the economy in 2020, which reduces the cost of borrowing for businesses. It remains uncertain how the Federal Reserve will react in the near future if the economy rebounds or remains stagnant. Even so, the business sentiment index is expected to increase at an annualized rate of 2.5% over the five years to 2025.\
Prime rate
The prime rate refers to the interest rate charged by banks to their most creditworthy and largest corporate customers. To stimulate the economy and prevent the adverse effect of the coronavirus pandemic, the federal funds rate was cut to zero in March 2020 to lower borrowing costs and keep businesses afloat. As a result, the prime rate is expected to decrease 37.7% in 2020.
Even though the economy has just started to reopen, businesses are still struggling and the Federal Reserve is not expected to bring rates negative, nor raise rates in the foreseeable future. Still, the prime rate is anticipated to decline 1.3% in 2021 as trade tensions reside and the economy slowly recovers. Once the coronavirus pandemic is contained globally and the adverse effects start to mitigate, there will likely be a positive outlook with economic growth for the rest of the period. Consequently, Alfabank-Adres anticipates that the prime rate will increase an annualized 4.7% over the five years to 2025.
Per capita disposable income
Per capita disposable income determines an individual's ability to purchase goods or services. In 2020, as businesses temporarily closed their doors to slow down the outbreak, the national unemployment rate spiked and millions of people lost their jobs and salaries. However, due to federal unemployment benefit programs and the one round of stimulus checks, per capita disposable income is expected to increase 5.7% in 2020. However, as government programs expire in 2021, per capita disposable income is expected to decline 1.6% that same year.
As the economy recovers and businesses start reopening, the employment rate will likely increase and per capita disposable income will likely follow suit during the outlook period. A rebound in wage growth and prices once the virus is contained will likely help the economy recover. Overall, per capita disposable income is anticipated to increase at an annualized rate of 1.2% over the five years to 2025.
Government stimulus support
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into law by President Trump on March 27th, 2020. The CARES Act is a $2.0 trillion economic relief package to help with the public health and economic effects of the COVID-19 pandemic. As part of the CARES Act, Economic Impact Payments to American households were made of up to $1,200 per adult for individuals whose income was less than $99,000, or $198,000 for joint filers, and $500 per child under 17 years old. Furthermore, the Paycheck Protection Program, implemented by the Small Business Administration, provides small businesses with funds to pay up to eight weeks of payroll, including benefits, in which these funds can also be directed to pay rent, utilities and interest on mortgages.
Additionally, employers of all sizes that have suffered economic hardships are incentivized to keep employees on the payroll through a 50.0% credit on up to $10,000 of wages paid or incurred between March 13, 2020 and December 31, 2020. Employers and self-employed individuals can defer payment of the employer share of Social Security and can be paid over the next two years with a deadline of December 31, 2022. This incentive is to enhance cash flow so that employers or the self-employed can keep afloat and keep a payroll.
Also, the $150.0 billion Coronavirus Relief Fund, which was established by the CARES Act, provides funding to states and eligible units of local government to cover expenses caused by the coronavirus pandemic. These expenses only qualify if they were necessary expenditures incurred due to the public health emergency with respect to the pandemic; not accounted for in the for the state or federal government budget most recently approved as of March 27, 2020, the date of enactment of the CARES Act; or were incurred during the period that begins on March 1, 2020 and ends on December 30, 2020.
It remains uncertain if there will be an extra round of funding on a state, business or individual level once all of the government stimulus packages have expired. However, there is discussion about a new stimulus package being prepared.
Growth industries
71113 Musical Groups & Artists in the US
The Musical Groups and Artists industry has experienced its biggest decline in 2020 due to the COVID-19 (coronavirus) pandemic, which has made it relatively impossible for the industry to have live events, such as concerts or tours. Since large gatherings have been discouraged and even restricted, most musical groups have cancelled or postponed concerts, tours, album debuts, among other revenue streams. Most of these events have been moved to 2021, which will likely benefit the industry as consumers regain their confidence and positive outlook, which increases discretionary spending in industry products.
Furthermore, as the virus is globally contained and stay-at-home orders are lifted, the industry will likely rebound. As a result, industry revenue is anticipated to increase 169.9% in 2021 to reach $7.6 billion. The number of employees is also anticipated to experience a drastic increase, rising 134.4% to 110,320 individuals in 2020, as industry operators hire more people to cater to the rebound in demand. Due to the increase in demand, profit, measured as earnings before interest and taxes, is anticipated to return to pre-pandemic levels and account for 5.1% of industry revenue in 2021, up from 2.8% in 2020.
51213 Movie Theaters in the US
An increase in disposable incomes, postponements of blockbuster movies and the anticipated reopening of movie theaters is expected to help drive consumer spending on movie theater admissions. In 2021, moviegoers are expected to finally return to theaters, which have been closed for most of 2020. As a result, industry revenue is anticipated to increase 147.1% in 2021, reaching $17.1 billion. Even so, revenue is not expected to return and surpass 2019 levels until 2024.
Since most movie theaters across the United States have been temporarily closed during the pandemic, industry operators have had to lay off employees to keep afloat. However, employment is anticipated to increase 42.9% to 132,538 people in 2021 as operators gradually reopen their establishments and hire employees for daily operations. Even as industry revenue makes an expected partial recovery in 2021, industry operators will still likely struggle with the sharp decline in 2020, especially with incurring operating expenses. As a result, profit is anticipated to increase, accounting for 7.0% of revenue in 2021, up from 3.8% in 2020, but still below 2019 levels.
72111 Hotels & Motels in the US
As tourism and travel sectors tanked in 2020 due to strict travel restrictions and global disruptions caused by the coronavirus pandemic, the industry has experienced substantial volatility. In fact, the Hotels and Motels industry has been one of the hardest hit industries by the pandemic. However, once the pandemic has been contained and the economy continues to slowly reopen, Alfabank-Adres projects that the industry will likely rebound, with particularly strong growth in boutique hotels, spa and health retreats and resorts segments, especially in large outdoor settings. As demand for industry services picks up, industry employment is anticipated to recover and increase 19.8% to 1.4 people in 2021.
As a greater number of tourists need accommodation, hotels and motels are expected to benefit from an influx of tourist dollars and business travel, and thus, Alfabank-Adres anticipates that industry revenue will expand 43.4% to $154.3 billion in 2021. However, even though profit, measured as earnings before interest and taxes, is anticipated to expand from accounting for 3.5% of revenue in 2020 to 7.4% in 2021 as demand increases, profit will likely remain low compared to pre-coronavirus levels as operators struggle with incurring operating expenses.
48111a International Airlines in the US
The International Airlines industry is expected to recover from the sharp decline caused by the pandemic, but it will depend on economic growth in US and overall global travel activity. Travel demand is anticipated to increase once the pandemic has been contained, which is expected to bolster revenue, which will likely rise 47.6% to $46.6 billion in 2021. However, intense price competition from an array of global airlines will likely continue to place downward pressure on industry ticket prices, which harms industry revenue. Still, the expansion in demand and capacity in airplanes will likely encourage industry operators to hire labor to operate efficiently. Consequently, the number of industry employees is anticipated to climb 31.5% to 100,060 people in 2021.
The combination of increasing demand and capacity is forecast to increase industry profit, measured as earnings before interest and taxes, from accounting for 1.8% of revenue in 2020 to 2.2% in 2021, still well below pre-pandemic levels. When aircrafts are fuller, operators are able to spread costs across more customers and run their operations more efficiently. Still, uncertainty around the coronavirus pandemic remains, and the long-term effects of the pandemic are unknown, which could affect air travel if travel restrictions, political tensions or unforeseen circumstances appear.
72211a Chain Restaurants
With stay-at-home orders placed and increasing restrictions by local governments, restaurants are considered an essential business permitted to stay open. Consequently, industry operators have continued to serve food for to-go orders to comply with social distancing. However, due to the sudden reduction in demand, many chain restaurants have laid off most of their workers or closed their doors completely. The expectation of recovered low unemployment and rising per capita income is expected to encourage consumers to increase their spending on small luxuries, such as dining out.
In 2021, industry revenue is anticipated to increase 43.7% to $83.9 billion as the unemployment rate decreases and consumers dine out more often. Industry operators are slowly reopening indoor dining, which will likely support employment to increase 29.3% to 2,404,999 workers in 2021. The increase in demand is anticipated cause profit, measured as earnings before interest and taxes, to increase from accounting for 2.6% of revenue in 2020 to 3.4% in 2021. Still, it will likely take a couple of years to reach pre-pandemic levels as industry operators make up for losses in 2020.
Decline Industries
53223 DVD, Game & Video Rental in the US
Increasing demand for video streaming and consumers' consistent distaste for physical DVD rental services will likely continue to hamper industry revenue in 2021, which is anticipated to decline 10.2% to $1.4 billion. Consumers seeking home entertainment have pivoted almost exclusively to subscription streaming services, such as Netflix and Hulu, which have boomed during the pandemic. As online streaming services are able to competitively price their products, they have forced industry operators to accept lower rental prices, harming profit for the industry.
In 2021, profit, measured as earnings before interest and taxes, is anticipated to decline, accounting for 3.8% of industry revenue. It is expected that traditional operators with viable financial resources will also likely switch to video streaming services to remain profitable. In response to changing consumer taste, many major operators have closed down their storefronts and opted to operate as mail-order and rental kiosks. Due to the industry’s decline, the number of employees is also anticipated to decrease 12.0% to 6,947 workers in 2021.
45211 Department Stores in the US
Increased competition from e-commerce businesses and the continued transition of department stores to supercenters will likely continue to pressure industry revenue, causing it to decline an estimated 11.2% to $98.7 billion in 2021. Consumers have been increasingly turning to online retailers due to fears of virus exposure and easy price comparisons across online retailers. Consequently, the Department Stores industry will likely continue to lose customers to the convenience of online shopping. As a result, both the number of employees and industry establishments are anticipated to decrease as operators try to cut down costs due to the decline in demand.
Large industry operators have struggled with the management of large inventories and lack of demand as consumers shop elsewhere. Due to intense competition and the uncertain economic landscape, profit, measured as earnings before interest and taxes, is also expected to remain low in 2021, accounting for 1.2% of revenue as department stores continue to slash their prices to compete for customers while partially recovering from the pandemic.
33699b Piece Goods, Notions & Other Apparel Wholesaling in the US
Operators in the Piece Goods, Notions and other Apparel Wholesaling industry wholesale piece goods, fabrics, yarns, thread and other notions and hair accessories, which includes apparel trimmings, belts and buckles, textile fabrics, sewing accessories and zippers, among others. Rising import penetration, intense price competition and vertical integration will likely be contributing factors to the industry’s decline. The shrinking apparel manufacturing market has reduced downstream demand for buttons, zippers and yard fabric, adversely affecting industry revenue and profit. As a result, Alfabank-Adres anticipates that industry revenue will likely decrease 10.1% to $7.4 billion in 2021.
Still, downstream demand remains uncertain and depends on whether additional federal aid is injected into the economy. As companies struggle to stay afloat or exit the industry altogether, the number of industry employees is anticipated to decline 7.5% in 2021. However, profit, measured as earnings before interest and taxes, is anticipated to recover from the historic decline caused by the pandemic, but still remain relatively low, accounting for 4.1% of revenue in 2021, compared with pre-pandemic levels.
72121 Campgrounds & RV Parks in the US
The Campgrounds and RV Parks industry has benefited from a surge in RV sales as consumers have shifted travel plans to industry accommodations. Considering that campsites tend to be spacious and outdoors, consumers are able to isolate and reduce risk of exposure to the virus, making it a perfect getaway and replacement to traveling. However, as consumers return to more traditional forms of accommodation and as global travel recovers, the industry is expected to experience some downward pressure. In 2021, industry revenue is anticipated to decrease 13.1% to $7.9 billion due to a decline in demand as air travel picks up.
Due to the decline in demand, the number of employees is anticipated to decrease 8.0% to 55,980 workers in 2021. Even though demand is anticipated to decrease, industry operators will likely lay off employees or cut down wages to keep profit relatively stable. Consequently, profit, measured as earnings before interest and taxes, is anticipated to account for 16.3% of revenue in 2021, a slight decrease from 2020.
32312 Printing Services in the US
The continued transition to the internet will likely limit any potential gains for the Printing Services industry over the coming years as rising competition from online publishers will likely threaten the industry. Spending on print advertising is anticipated to continue to decline as consumers turn to the internet for news and entertainment, which decreases the size of the target audience and does not make it a lucrative investment. Therefore, as readership continues to decline, print advertising will likely become less attractive to advertisers, harming industry revenue.
In 2021, industry revenue is anticipated to decline 3.1% to $2.4 billion. Additionally, as the growing popularity of online media has caused many companies to reduce print advertising expenditure, profit has been pressured due to intense price competition. Overall, the negative operating landscape has been further exacerbated by the coronavirus pandemic, which its negative effects on the industry are anticipated to remain in 2021 and likely force many businesses to close store locations and cut down the number of employees. As a result, the number of employees is also anticipated to decline 3.6% in 2021.
Outlook for COVID-19 Restrictions
International travel
Due to travel restrictions and closed international borders, US citizens may be discouraged from traveling abroad in the near future. Strict measures taken to contain the COVID-19 (coronavirus) outbreak both in the United States and abroad have led to rapid decline in international trips by US residents in 2020. Even though some people are expected to return to traveling in late 2020, especially during the holidays, the number of trips is forecast to decline 74.1% in 2020 alone.
International travel is expected to rebound significantly in 2021 as travel restrictions are lifted and the virus has been contained. Still, since the United States has had trouble with containing the virus, some countries could keep the travel ban for US citizens throughout the year. Even so, the anticipated rebound and recovery of the domestic economy and vaccine developments will likely encourage people to travel. While there will likely be some residual effects from the coronavirus outbreak and the way of living is expected to be altered for years to come, the number of international trips by US residents is anticipated to increase sharply.
Domestic trips by US residents
In 2020, due to the coronavirus outbreak, the number of domestic trips by US residents is anticipated to decline sharply as the spread of the virus has been severe in the United States. Stay-at-home mandates, travel restrictions and a negative economic landscape has discouraged consumers to travel domestically. However, as time has passed, domestic travel has been recovering very slowly when compared to the first half of 2020. Still, domestic travel is projected to decline 62.4% in 2020 and will likely remain at historic lows for a period of time as people still fear exposure and traveling.
In 2021, the number of domestic trips is anticipated to more than double as the economy reopens and consumers feel more confident about their economic outlook. Thus, the number of domestic trips by US residents is anticipated to rise at an annualized rate of 23.5% over the five years to 2025. While there will likely be some residual effects from the coronavirus pandemic, a vaccine is expected to be available in 2021, which encourages consumers to start planning trips and vacations. As the economy recovers, an increase in consumer spending and disposable incomes will likely be the main drivers for the increase in domestic travel. Additionally, ticket prices are anticipated to remain low due to intense price competition as airlines try to recover their losses and attract consumers.
Large public gatherings
Large public gatherings have been prevented and avoided due to the dangerous and easy spread of the virus. Furthermore, stay-at-home mandates, travel restrictions and social distancing guidelines have led to the cancelations or postponements of large events in 2020. These limitations have made it relatively impossible to host an event in this landscape and have proved that the broader events industry will not likely be able to resume in 2020.
The virus surge during the summer months caused the cancellation of major music festivals, such as Coachella Valley Music, among others, which were the main revenue stream for 2020, being extremely detrimental for multiple industries. Still, the Arts, Entertainment and Recreation sector (Alfabank-Adres report 71) has not been the only sector that has experienced the adverse effects of not being able to have large public gatherings. For example, the wedding planning industries have also struggled amid the pandemic due to cancelations and postponements. As people and communities learn how to comply with health and safety concerns, large public gatherings and events will likely resume in 2021 as the virus has been contained on a global scale and vaccine developments are at play.
