Decision Analyst’s U.S. Economic Index Continues to Rebound

The Decision Analyst U.S. Economic Index rose to 110 in March 2021, a 3-point increase from February 2021. The Index is still 8 points below where it was in January 2020, before the pandemic started. The Index tends to be a leading indicator of future economic activity. The past-20-year history of the Index is shown below.

“The U.S. Economic Index continues its rebound from the low point reached in April 2020. The pace of COVID vaccinations is moving toward an average of 4 to 5 million doses a day, as distribution of the vaccines expands. Assuming none of the COVID variants trigger a new wave of infections, the U.S. economy should pick up speed during the second quarter and continue its rapid expansion through the end of 2021 and into 2022. By early summer, many restaurants, hotels, offices, etc., could resume full and unfettered operations. A growing risk factor is accelerating asset inflation (land, real estate, stocks, houses, etc.) and accelerating inflation in commodities and consumer goods. Corporate layoffs and business bankruptcies will continue to exert some drag on the U.S. economy through much of 2021,” said Jerry W. Thomas, President/CEO of Decision Analyst. “The U.S. economy will not return to its pre-COVID-19 levels until 2022.”

“Planned future purchases (see graphs below) continue, on average, to indicate that consumer spending (roughly 70% of the U.S. economy) is returning and will likely remain on an uptrend through the remainder of 2021. The graphs below show the percentage of U.S. households who say they are likely to make various types of purchases in the next 12 months.”

"These future purchase intentions suggest that the economy will continue to grow during the balance of 2021. After a year of lockdowns and quarantines, Americans are planning to increase travel spending in 2021, especially during the second half of the year. Remodeling spending is likely to increase, as inflation in new home prices is encouraging consumers to keep and improve their houses, rather than buy a new home. All together, these graphs point to a positive economy during 2021, but with significant inflation risks and possible financial-market risks just over the horizon," said Thomas.

Methodology

The Decision Analyst Economic Index is based on a monthly online survey of several thousand households balanced by gender, age, and geography. The scientific survey is conducted in the last 10 days of each month. The Economic Index is calculated from 9 different economic measurements using a sophisticated econometric model. The result is a snapshot of coming economic activity in each country surveyed, as seen through the eyes of representative consumers living in the respective countries.

Decision Analyst conducts its concurrent economic surveys each month in Argentina, Brazil, Canada, Chile, Colombia, France, Germany, India, Italy, Mexico, Peru, the Russian Federation, Spain, and the United States. Whenever the Decision Analyst Economic Index is greater than 110, it tends to signal an expanding economy. An Index value of 90 to 110 suggests a no-growth or slow-growth economy, and near or below 90 generally indicates economic contraction. These guidelines vary by country, however.

About Decision Analyst

Decision Analyst (www.decisionanalyst.com) is a global marketing research and analytical consulting firm specializing in strategy research, new product development, advertising testing, and advanced modeling for marketing decision optimization. For over 40 years, the firm has delivered competitive advantage to clients throughout the world in consumer-packaged goods, telecommunications, retail, technology, medical, and automotive industries.

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