We have been continuously inundated with so much negative news the whole of 2020 that we all need something to lift our spirits. We get it!
You may be thinking, where can we find positive news these days? Well, we do not have to look further than the United States economy, where economists see positive signs and a relatively brighter future ahead.
I. Positive economic signs amidst COVID-19
“Do not trust to hope; it has forsaken these lands.” – Eomer of the movie The Lord of The Rings.
We do know that the good guys will win towards the end of the LOTR trilogy, as all good guys do, but that quote encapsulates how everyone felt as they battled evil throughout the saga.
Meanwhile, back on earth, people share the same sentiment, especially in the early stages of the pandemic. Everyone talks about job losses, financial losses, and – worst of all – death.
But eight months into this lockdown, we are starting to see positive signs that can make us “trust to hope” once again.
Here are some of the thighs that are making us look forward to the coming months.
- The construction machinery sub-sector is not as affected now as it was during the Great Recession.
The current crisis has affected different sectors in varying degrees. While many industries have been brought to their knees, one particular sector has fared better than others.
The expected government infrastructure stimuli resulted in the construction machinery subsector being less-severely affected than during the Great Recession of 2008. Also, auto production saw a 107% jump in production in June 2020, which contributed to the partial resurgence in industrial production.
- New business applications were up in August 2020 and are on track to outpace recent years.
Business closures peaked in the spring while business formations were slow compared to its pre-crisis levels.
But that may be a thing of the past. Recently, many new high-propensity businesses – or businesses that are likely to hire employees in the future – have filed for application. By August this year, there are already 56 more new applications compared to August 2019. It is worth noting that states that have heavy manufacturing bases rebounded the fastest.
The Economic Innovation Group provides us with a few explanations for this surprising increase.
- There may have been a backlog in applications due to court closures during the lockdown;
- Those who recently lost their jobs might be forming their own businesses; and
- There may be some entrepreneurs who are taking advantage of new opportunities brought about by the pandemic.
- There is a demand for new kinds of products due to the pandemic
Demand for health products has risen, opening up new opportunities for many enterprising individuals who are out to take advantage of this boom. Consumers have also gone online for their purchases, so e-commerce sites have been making a killing, and we see it continuing for years to come. We also see high demand for delivery services as people refuse to leave their homes and instead are letting the goods come to them.
- Personal savings rate is at record levels
Spending among Americans fell sharply due to the pandemic, which is one of the causes of this recession. The bright side is that savings have increased.
Savings rates for American households got a big boost from stimulus payments, which includes unemployment benefits and federal transfers to households. As a result, we see disposable income exceeding pre-pandemic levels. While some people spent their stimulus checks immediately after receiving them, many others decided to save the money. We will probably see more spending in the next few months as consumers become more comfortable with the situation.
II. The Brexit solution is almost here
For four years now, issues regarding Brexit have caused market turmoil. It may all come to an end soon with a solution backed by a new government.
Observers note that the benefit will come in the form of stability. Stability will provide UK businesses with an environment that would let them start working again without worries, and it will in turn help global growth.
III. The automotive industry is showing positive signs
According to a report by Experian, there were positive trends in the auto industry toward the end of Q2.
April sales for new vehicles were down by 50.8%, while sales of used vehicles went down 54%. Sales of new and used vehicles improved in June, with new vehicle sales still down but only by 10.6%. Used vehicles, on the other hand, increased by .2% compared to last year.
Manufacturers have given consumers plenty of reasons to buy cars. They hope to recapture interest through incentives.
So far, they have succeeded. According to Experian, customers with strong credit are taking advantage of manufacturer incentives, thereby boosting sales.
Car loan amounts reached an average of $36,072, higher by $4,000 from last year. The increase in the amount seems to be driven by consumers who prefer more expensive full-sized pickups.
IV. Stocks rose in September
Investors are betting on an economic rebound, hoping that the worst effects of the pandemic are behind us. The S&P 500 index rose .5% while the Nasdaq composite climbed 1.2% in September.
V. The consumer economy
Consumers have never really stopped spending despite a slowdown in the job market. Demand for essential goods remains almost the same. Observers feared that the expiration of the expanded federal unemployment benefits could impede the recovery, but this trend has allayed those fears.
Many other positive stories are happening around the world. During this time of fear, new heroes were born: front-line workers who never reneged on their duties; ordinary citizens sharing what little they have with the less fortunate; and individuals wearing face masks to make sure the virus would not spread. Even many private companies are operating at a loss so they can make sure their employees survive financially.
These are all positives for the general public, and hopefully, these stories will make us look forward to brighter days ahead.