COVID-19 continues to impact the economy nearly a year after the pandemic first reached the U.S.
Despite recent surges in cases, Boyd Nash-Stacey, senior economist at BBVA Research, says the impact on the economy will not be as big in 2021.
“We're still in an environment where COVID weighs heavily on the economic outlook,” Nash-Stacey said during a Jan. 28 webinar presentation to the Association for Corporate Growth’s North Florida chapter.
However, “we're going to see new impetus for growth” in 2021, he said.
Whether or not President Joe Biden’s $1.9 trillion stimulus proposal is adopted by Congress, Nash-Stacey expects additional fiscal stimulus legislation to help lift the economy.
“This has been a rare instance where the support for fiscal stimulus has been somewhat bipartisan,” he said.
Meanwhile, the economic impact of the pandemic is not as bad as it was last year.
“The cost of the rise in cases has been significantly reduced over time,” Nash-Stacey said.
Shortly before Nash-Stacey’s presentation, the U.S. Bureau of Economic Analysis reported that U.S. gross domestic product fell 3.5% in 2020.
Florida fared better than other parts of the economy, Nash-Stacey said, with its final GDP expected to be down 2.8% for the year.
“Obviously this was a function of some of the decisions local leaders made,” he said, with less severe lockdowns than in other areas.
Florida’s economy is heavily dependent on tourism and while that industry declined sharply in 2020, Nash-Stacey said there was a pickup in summer travel that helped Florida’s economy.
He also said Jacksonville’s economy performed better than other cities in 2020.
“Even with the headwinds that would have been expected for Florida, unemployment for Jacksonville has outperformed,” he said.
Jacksonville’s unemployment rate in December was 4.8% without seasonal adjustment, below Florida’s unadjusted rate of 5.8% and the U.S. rate of 6.5%.
COVID-19 cases rose in just about every U.S. city late in 2020, including Jacksonville, and rose sharply in some cities.
“I think Jacksonville escaped any type of scenario like that and was able to still perform in that environment,” Nash-Stacey said.
“I think there’s a lot of potential for upside” in Jacksonville, he said, “especially with this tailwind we're likely to see from fiscal policy heading into 2021.”
While lockdowns were necessary in 2020 to stop the spread of the virus, Nash-Stacey said those are less likely this year.
“I think at this point it's a matter of living with it as opposed to letting it overwhelm economic activity,” he said.
The pandemic may have some long-term impact on consumer behavior as people have become accustomed to staying home. Nash-Stacey expects behavior to normalize as more people are vaccinated.
“I think clearly there’s going to be a lot of pent-up demand,” he said.
“People are going to be very eager to get back out there and travel and do some of the things that bring a kind of normalcy back to their lives.”