The Center for Finance and Economics in the 91福利社 College of Business released its first report, unpacking a roller-coaster ride of economic indicators fueled by the COVID-19 pandemic, as well as a contentious presidential election, and gives an outlook for 2021.
Among the report鈥檚 findings were projections of a fourth-quarter economic recovery with a 2.5 percent growth rate, compared with the actual growth rate of 4 percent. Other highlights include the assertion that 鈥渋nvestment is the key component for long-run, sustainable economic growth.鈥�
The report stated that while consumption spending, helped along by government stimulus payments to consumers, 鈥渒eeps the ship afloat,鈥� investment spending determines its direction.
鈥淭hus far, most government spending focused on pandemic relief has been geared to the consumer, which is understandable, but without due consideration to investment spending, it may be a rehash of the 2008 recovery,鈥� says the report.
Also, while the unemployment picture improved later in 2020, unemployment figures for African-Americans and Hispanics, which were improving before the pandemic, have been headed in the other direction since the pandemic restrictions began. Continued improvement in the labor market is seen as essential to turning things around.
The report also predicts that under President Joe Biden, higher corporate taxes and increased regulations could lead to a more conservative 2 percent rate of growth, as well as stabilization of inflation, but no deflation.
鈥淕overnment stimulus and Federal Reserve action should help buoy prices into the near future. We also expect the unemployment rates to continue to fall, but not to the levels under the previous Trump administration,鈥� according to the report, which predicts an unemployment rate of 5.5 percent in 2021.
The report concludes, 鈥淲ith so many unknowns, it鈥檚 hard to be too optimistic. We would rather err on the side of caution, and be pleasantly surprised, than overestimate and wind up with another 2019.鈥�
The Center for Finance and Economics will release another outlook report at the end of the Spring Semester.
The Center also provides students with practical, hands-on experiences, including a student-managed investment fund directed by Dr. Kent Saunders of the College of Business and an investment fund committee. The fund allows students to engage in real-life shareholder advocacy and engage in socially responsible impact investing. The Center also plans to produce video updates on the economy through its presence on LinkedIn, Facebook and Instagram