Decision Analyst’s U.S. Economic Index Points To Slowing Growth In Second Half

The Decision Analyst U.S. Economic Index stood at 114 in July 2021, unchanged for three consecutive months. The Index is 14 points above where it was 12 months ago in July 2020 and only 4 points below the pre-pandemic Index level in January 2020. 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. COVID-19 vaccines are now widely available in the U.S., and a majority of the adult U.S. population has received at least one shot of a COVID vaccine. Children aged 12-15 are now eligible for the vaccines. The reopening of the U.S. economy permitted by the high vaccination rate is now at risk, as COVID variants are increasing the number of cases in many states. The U.S. economy should continue to expand during the second half of 2021, but the high growth rate of the U.S. economy during the first half is not likely to continue. Inflation and inflation fears are negatives that could slow consumer spending. Supply chain issues are disrupting manufacturing operations and construction activity, and the U.S. government will soon face debt and budget struggles. Some of the government’s economic stimulus efforts are beginning to reach ‘end of life,’ and this will be a drag on consumer spending going forward. Real estate foreclosures should spike in the second half of 2021, another negative factor,” said Jerry W. Thomas, President/CEO of Decision Analyst. “Importantly, year-over-year increases will be more difficult during the second half of 2021, because the same time period in 2020 (the comparison period) was relatively strong.”

“Planned future purchases (see graphs below) continue, on average, to indicate that consumer spending (roughly 70% of the U.S. economy) will likely remain reasonably steady through the fall and winter. The graphs below show the percentages of U.S. households who said they are likely to make various types of purchases in the next 12 months.”

"Future purchase intentions suggest that the economy will maintain its current pace during the balance of 2021,” said Thomas, “even though growth rate comparisons to 2020 will become less favorable. Americans are still planning on traveling into the fall, just maybe not as much as in the summer. Home improvements, such as remodeling and new furniture spending, are likely to stay strong, 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 reasonably stable, slowing economy during the balance of 2021 and into early 2022.”

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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