Decision Analyst’s U.S. Economic Index Indicates Sluggish Economic Growth for the Start of 2022
The Decision Analyst U.S. Economic Index stood at 111 in October 2021, a 3-point decrease from July 2021, but still 4 points above 12 months ago (October 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 to rebound from its low point reached in April 2020. COVID-19 vaccines are now widely available in the U.S., a large share of the U.S. adult population is fully vaccinated, and many adults are now receiving booster shots. Many teenagers are now receiving COVID-19 shots, and younger children are just now starting to receive the vaccine. If these positive vaccination trends continue, then the U.S. economy should continue to expand during the final months of 2021 and into the first quarter of 2022, but headwinds are strengthening. Rising inflation is reducing consumers’ purchasing power and causing consumers to delay some major purchases. Supply chain disruptions and outages are negatively affecting economic activity. Many of the government’s economic stimulus efforts are beginning to wind down, a drag on the economy going into the first half of 2022. Many small businesses continue to fail in some sectors (but surprisingly, many new small businesses are popping up elsewhere),” said Jerry W. Thomas, President/CEO of Decision Analyst. “A growing threat to the economy is the likelihood that many homes purchased at inflated prices could be underwater within the next year or two. We still think the economy will continue to grow in 2022, but at very modest rates compared to 2021,” according to Thomas.
“Planned future purchases (see graphs below) indicate that consumer spending (roughly 70% of the U.S. economy) is moderating as 2021 draws to a close. The graphs below show the percentages of U.S. households that say they are likely to make various types of purchases in the next 12 months.”
"Future purchase intentions suggest the economy is softening in the final quarter of 2021,” said Thomas. “Planned purchases are holding steady to trending down. Home buying and remodeling is looking weaker. None of the categories are indicating rapid growth in 2022. These factors point to a slowing economy during the balance of 2021 and the first part of 2022.”
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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