Just recently I went on a trip to Los Angeles to visit some friends. I had a great time, but the last night I was there I was pretty surprised by what I saw. Up until that point everything was about what I had expected given the COVID environment we’re living in. Everything was mostly operating as normal, just to a lower capacity, and of course you have to wear a mask everywhere. This was all expected, and I didn’t notice anything too different until our last night when we went to West Hollywood to check out the nightlife and tourist attractions there. When we got to West Hollywood and walked down the main stretch where all the bars and nightclubs are I noticed that over half of the establishments there were either shut down or temporarily closed. I had assumed by now that most everything would have reopened, but I found that was not the case. Depending on where you live, you might also be seeing the same thing. This is the unfortunate reality we are in now. I think most people had assumed that by this point things would be back to normal and that the economy would be in a roaring reopening phase.
Just a couple months ago in June, the Federal Reserve forecasted GDP growth of 7% for this year. 7% GDP growth would be the roaring economy we might have been expecting. Now the data is tracking what I saw on my trip. The Fed just cut their GDP forecast for this year from 7% growth down to 5.9%. Along with this, we are still seeing higher unemployment, declining PMI growth numbers, and continuing supply chain issues everywhere. Looking at what all this is telling us, it’s not a pretty picture.
On the other hand, we all know that the main driver of these economic issues is COVID-19. As long as COVID is a problem, the economy will have problems. On that front, we are starting to see COVID cases globally and in the US roll over. Also, delta is now the primary variant of COVID now. It is estimated that close to 100% of the COVID cases in the US are the delta variant, and we aren’t seeing signs of any other threatening variants on the horizon. If COVID case numbers continue to move lower, it’s possible that cases could stay down, and we could expect that roaring economy to start making a comeback just in time for the holiday season.
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I believe this is the thinking we should be embracing right now. Everything in the economy may look bad right now and for the near future, but if we get past COVID everything should start to get much better.
