Alliance Bank of Arizona Releases National Economic Intelligence Report that Zeroes in on Post-Pandemic Economy
May 17, 2021
Alliance Bank of Arizona, a division of Western Alliance Bank, Member FDIC, has released a National Economic Intelligence Report that takes an in-depth look at how the U.S. economy has fared through COVID-19 and what may be anticipated in the post-pandemic environment. Created by Beacon Economics, one of the nation’s leading Independent economic research and consulting firms, the report provides a broader picture of the fiscal health of the nation, which affects local economies.
“Our clients are seeing the light at the end of the pandemic tunnel. By providing thoughtful insights into the trends that are affecting the economy and a look into what economic experts expect in 2021, the Alliance Bank’s National Economic Intelligence Report is designed to help businesses that fuel our economy better prepare for the future,” said Don Garner, Chief Executive Officer of Alliance Bank of Arizona.
The report examines a broad spectrum of drivers, including unemployment, housing and the health of key industries. Among the insights:
Getting Back to Work With a holistic look at the economy, the most significant pandemic-activated declines took place in the labor market, which sustained a significant downturn in March and April 2020, resulting in the loss of 22 million jobs, sending unemployment rates skyrocketing from 3.5% to 14.8%. A year later, more than half of the jobs have been recovered and the unemployment rate rests at 6.7%.
With the most substantial job loss (40%) occurring in the Leisure and Hospitality sector alone, Financial Activities and Professional, Scientific, Technical and Management Services remained largely unaffected. As the numbers suggest, lower-income and less-skilled workers were hardest hit. As laid out in the National Economic Intelligence Report, Beacon Economics anticipates strong recovery and growth in Leisure and Hospitality in 2021, yet not quite to pre-pandemic levels.
Examining Household Economic Health Yet despite the job losses and unemployment dip, household savings have shot up to levels not seen in the history of the U.S., including 25% in the second quarter of 2020 and 13.4% by the end of the year due largely to fiscal stimulus. As well, household debt service payments were at their lowest share of disposable personal income in decades.
The report zeroes in on bigger pocketbooks, as well as recovering unemployment rates as the key drivers that will contribute to growth in 2021.
Key Sectors Under the Microscope The report also took a keen look at the health of key industries, which mirrored the unemployment rates. With Leisure and Hospitality seeing the largest decline, most industries were largely unaffected by the downturn. Wholesale Trade, Information Services, Financial Activities, Professional, Scientific and Tech Services and Management all experienced declines off less than 3% from December 2019 to December 2020.
Another major indicator of future economic health is within the residential real estate sector, which Beacon Economics predicts will continue its strong surge. Virtually uninterrupted by the pandemic, the sale of single-family homes across the nation increased by 23% from December 2019 to December 2020 in large part to low mortgage rates.
A Look Ahead Against the backdrop of plunging employment figures and rapidly declining GDP as the pandemic took grip, the U.S. experienced one of the shortest-lived recessions of recent times. Although the bulk of the downturn was seen in April and May 2020, the economy saw a slight loss of momentum at the end of 2020 as the spread of coronavirus peaked and new variants emerged.
But as vaccine distribution becomes much wider and treatment options continue to improve, Beacon Economics predicts that 2021 will be a year of unprecedented growth in terms of recent history. Unlike prior recessions, the pandemic-induced recession occurred against a strong economy that included high savings rates, low household debt and a healthy consumer. It is anticipated that employment gains and anticipated consumer spending bolstered by the second fiscal stimulus package, will drive strong economic expansion in 2021. An updated perspective on the state of the economy specific to developments affecting leaders across professional and business services industries will be shared by Beacon Economics at Alliance Bank of Arizona’s 2021 Economic Forum on May 26. To attend the online presentation, register at info.alliancebankofarizona.com/econ-forum-5-2021.
For an in-depth view of the National Economic Intelligence Report, please click here.
Alliance Bank of Arizona
Alliance Bank of Arizona, a division of Western Alliance Bank, Member FDIC, delivers relationship banking that puts clients at the center of everything. Founded in 2003, Alliance Bank of Arizona offers a full spectrum of tailored business banking solutions and outstanding service, with offices in Greater Phoenix, Tucson and Flagstaff. Alliance Bank of Arizona was named 2021 Lender Firm of the Year by NAIOP Arizona, among many other awards and recognitions. As part of $65 billion Western Alliance Bancorporation — ranked #1 top-performing large bank with assets greater than $50 billion in 2021 by both American Banker and Bank Director — Alliance Bank of Arizona has the reach, resources and local market expertise that make a difference for customers.