Many experts are accelerating their forecasts for when our economy will return to normal.
According to Moody Analytics and CNN, our country is 88% back to its pre-pandemic economy with states like Idaho and South Dakota having economies performing better than before COVID-19 hit.
“We are certainly in the right place to have a speedy and quick reopening and recovery,” said Elise Gould, a senior economist at the Economic Policy Institute.
If you think back to last year, we heard a lot about letters and how they were to predict our economic recovery from the pandemic, the U, the V, the K-shaped recoveries.
It's the K recovery and its widening disparity between the haves and have-nots that is the reason why things might get better faster than some had expected as it gives a portion of the population more money to stimulate the economy’s growth.
In January of last year, prior to COVID-19, the U.S. savings rate, or money stashed after bills and spending, was 7.9%, according to the U.S. Bureau of Economic Analysis.
When COVID-19 hit in March, that number rose to 12.6%, and then by a month later, in April when lockdowns began, that number rocketed to 32.2% as spending decreased by 12.6%.
“We did decide that we would save more, that we’d be more cautious about optional spending,” said Denise King.
King and her husband, Darrell Beauford, were two of those people. They were not remiss to the immense hardships so many in the country were facing. The unemployment rate rose from 3.5% to nearly 14.8% in a matter of two months, but the couple figured if they could put some money away as an emergency fund, something they had never had before, they would.
Over the course of the next 12 months, King and Beauford were able to save $30,000 while donating more than $5,000 to charities benefiting those who were less fortunate.
“When people are left out of the discussion or not invited to the table about economic recovery or putting in the resources, you do get concerned that some people will be left in the dust,” said King.
But not only did savings rise, but debt also plummeted. According to a recent study by WalletHub, Americans were able to pay off $80 billion in credit card debt in 2020 and more than $56 billion in the first quarter of 2021.
The result is spending lots more as the country finally begins to shift its focus to something that resembles a post-pandemic norm.
“Fiscal spending has been key to being able to speed up this recovery,” said Gould. “So, by my calculations, if we continue to go on the track that we’ve been going month after month, we’ll see that we will actually be able to get down to 3.5% unemployment by the end of 2022.”
According to Gould, the continued stimulus packages from Congress have been game-changers as they have provided continuous relief to people and businesses, rather than temporary relief from a one-time payment.
The more people spend, she says, the more businesses make, the more they can rehire staff, and the more those so-called “have-nots” can feel some relief.