As the U.S. economy enters the new year, it faces a new set of challenges — but that doesn’t mean that the lessons from 2021 are no longer relevant. Over the past year, Morning Consult’s economic research team has drawn on our proprietary high-frequency economic data to track the economic recovery, identifying inflection points, building an integrated narrative and offering businesses and policymakers actionable insights along the way.
Several central themes emerged in 2021 that are likely to continue to shape how we view the economy: Labor supply constraints began sooner and persisted longer than expected, acting as a headwind to economic growth and in July prompting us to dive deep into emerging labor market trends, including the underlying causes preventing Americans from looking for work. The generosity of unemployment benefits emerged as a key deterrent to job-search activity, but so did health concerns and other family obligations.
With the benefit of high-frequency global data, in late September we also identified a fundamental change in the relationship between COVID-19 cases and economic activity. This “newfound resilience” allowed consumers to continue shopping, while businesses were able to retain workers in the face of record-high case counts. The lessons we learned from the economic response to the delta variant continue to inform how we think about the likely impact from omicron, as well as any future variants.
Inflation and supply chain disruptions drove much of our analysis throughout the year. We tracked rapid and persistent weekly increases in inflation expectations, allowing us to identify a turning point in October when inflation expectations stabilized. We also aggressively followed the severity and impact of supply chain disruptions on consumers and their purchasing habits. By November we saw light at the end of the tunnel, with supply chain disruptions starting to ease and younger consumers adapting their purchasing behaviors.
We have been tracking the disparate impact of the pandemic across the different demographic groups since the K-shaped recovery in May 2020. The Morning Consult / Axios Inequality Index provides compelling evidence for the impact of policy interventions in mitigating economic inequality during the pandemic.
In our January 2022 U.S. Economic Outlook Report, we highlight the ways in which our outlook will continue to be shaped by the themes of last year, but also show how changes in economic policy fundamentally alter our approach to assessing economic risks.
Looking ahead, mass unemployment or a shutdown of in-person activities appear less likely than they were last year. However, policy changes mean that the economic consequences of such outcomes would be more severe. Millions of Americans have exhausted eligibility for unemployment insurance benefits, and the federal eviction moratorium expired in August.
If the pandemic drives widespread layoffs yet again, Americans will struggle to pay their bills, potentially prompting a higher incidence of missed payments and consumer defaults than we’ve seen since the pandemic began.
A slower global economic recovery also poses growing risks to the United States. In China, confidence has declined in recent weeks amid COVID-19 outbreaks and growing housing market weaknesses. Prolonged lockdowns or business closures in China will likely exacerbate ongoing supply chain disruptions in the United States.
While the future remains uncertain, the need for global, high-frequency economic data is even more pressing.We remain committed to providing Morning Consult’s community of readers, subscribers and clients with best-in-class economic analysis derived from world-class data.
Morning Consult Economic Research Team