LOS ANGELES — The latest University of California Los Angeles Anderson School of Management forecast expects robust growth for the United States and California as vaccinations speed up and COVID-19 infections decrease.
Leo Feler, a UCLA Anderson senior economist, tells Inside the Issues the combination of increased vaccinations and the Biden administration’s $1.9 trillion COVID-19 relief package are the driving optimistic forces behind the forecast for 2021.
“Once we actually have mass vaccinations, people will be able to spend much of the fiscal relief that they’ve received over the course of these past several months,” he said. “Then we should see economic growth much higher than we’ve had over the last four years.”
According to the national forecast, there will be 6.3% growth in 2021, 4.6% growth in 2022 and 2.7% growth in 2023. Feler notes by early summer the economy will begin recovering the most in industries like healthcare, retail, food, and hospitality.
“This might come a little bit as a surprise, but really it’s healthcare coming first,” Feler explained. “People will be making up for all the health check ups that they missed over the course of the pandemic.”
However, he shares COVID-19 will continue to impact the state’s tourism industry since international travel will not bounce back as quickly. Disneyland and other large theme parks will lose out on foreign guests as most of the world continues to lag behind the U.S. in vaccinations. Feler says the silver lining is that domestic travel will rise over the next few months.
“Since Americans aren’t going to be able to go to Europe, they will travel to California perhaps instead and so there’s going to be a little bit of a re-balance, but we still expect this to lag behind really because of international tourism taking a while to catch up,” Feler said.
The senior economist predicts unemployment levels will take time to drop as people re-enter the workforce in 2021, but there will still be large gains in employment starting later this spring. Restaurants and the hospitality sector will have the largest hiring movements.
“As people start coming back into the labor market and looking for jobs, that’s going to start working against the employment rate and pushing it up a little,” Feler explained. “We expect for all of the U.S. to be back at the unemployment levels we were at before the pandemic really by the end of 2022, beginning of 2023.”
As the pandemic wanes, Feler shares there are economic scars that will continue to be felt around the country. Less people will be going back to central business districts as remote work becomes more common post-pandemic. Children will have to make up for the loss of education over the past year. Women who left the labor market to homeschool may have trouble entering back into the workforce at the same levels they were at prior to the pandemic.
Still, Feler is hopeful the pandemic will ultimately be beneficial to society in the long term. He shares the most important element to future economic recovery is a continued commitment to reducing the spread of COVID-19.
“I’m a little concerned that we are unmasking and opening our economy very quickly before we’ve gotten mass vaccinations out,” he said. “At the rate that vaccinations are flowing, we’re talking about another month or so before we have a critical mass of people vaccinated.”
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