Looking Forward to 2021 Despite Election Uncertainty Risks
BY JASON SCHENKER, PRESTIGE ECONOMICS
As we begin to plan for the year ahead, we need to look back at 2020, understand current uncertainties and be prepared for how they could cast a shadow on the year ahead. Fortunately, we also need to consider upside opportunities for the economy and material handling in the year ahead.
The year 2020 was greatly impacted by the catastrophic costs of the COVID-19 pandemic and the recession that resulted from an economic shutdown designed to save lives. The goal had been to allow the U.S. economy time to shore up PPE, ventilator and ICU needs. In many ways, this goal was achieved. But it also sent the number of people on unemployment at one point to almost double the level of people on unemployment in 1933—the worst year of the Great Depression. The economic aftershocks of this pandemic and shutdown could reverberate into the year ahead and beyond. Despite these dynamics, there are reasons to be particularly optimistic for material handling and supply chain.
Present challenges and upside
While the job market remains weak and housing is at risk from relatively high numbers of unemployed, supply chain and material handling served an almost heroic function during the pandemic. In truth, without the U.S. supply chain—especially for nondurable goods like food, paper products and cleaning products—the economy and society might have faced even greater weakness, with even more unrest and instability.
It is important to recognize this valuable function that MHI members helped perform. Why? Because the supply chain is now a word kids and grannies use when they talk about COVID-19, the economy and their weekly delivery of groceries. It will also be something that average people in the general public will more readily recognize, acknowledge and embrace in the future as a bulwark of social and economic stability. That is big a deal! It also hints at an upside for material handling in the year ahead—and beyond.
Supply chain and material handling have long been overlooked manufacturing-adjacent industries. But no more. The fact that supply chain and e-commerce and associated technologies are having a moment is a good thing. After all, the successful expansion of e-commerce, supply chain and material handling capabilities have long been the linchpin of fulfilling the lofty promises of e-commerce. When the chips were down during the COVID-19 pandemic, those promises were fulfilled, and that is supportive of a positive outlook on trends through 2022.
Hope for the year ahead
The most optimistic economic scenarios for the United States show that the U.S. economy could recover to pre-pandemic Q4 2019 GDP growth levels by mid-2021. But softness in non-RV vehicle sales, the specter of a looming housing crisis, and lots of unemployed people could keep such an optimistic scenario at bay. In fact, it seems more likely that it may not be until mid-2022 that U.S. Real GDP will again achieve the reach Q4 2019 levels.