January '21

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66 • RV PRO • January 2021 rv-pro.com RV I N S I G H T Relief is in sight. Battered by the pandemic and scrambling to shore up finances, businesses can look forward to an easing of the pain over the next 12 months. Economists anticipate a gradual but noticeable recovery fueled by a surge in corporate profits, a strong housing market, and the successful rollout of a vac- cine, according to experts interviewed for this article. "The COVID-19 recession is over, and the economy is currently in an early-cycle expansion," says Sophia Koropeckyj, man- aging director of Industry Economics at Moody's Analytics, a research firm based in West Chester, Pa. The healthier the economy, the better for business profits. And Moody's expects the nation's gross domestic product (GDP) to increase at a 2.1 percent clip for 2021. That's a welcome rebound from the previous year's decline, expected to come in at minus 4 percent when figures are finally tallied. (The GDP, the total of the nation's goods and services, is the most commonly accepted measure of economic growth.) The Joe Biden presidential win should support an economic rebound in three areas, according to Koropeckyj. "Biden has proposed significantly more fiscal stimulus, which will pack a punch in the coming year as aggregate demand is still recovering from the pandemic," she says. "Second, Biden would not resume Trump's tariff wars with China, which have acted as a tax increase for consumers. Finally, Biden will liberalize international immigration, which will boost the supply of labor and in turn the economy's potential." Faster economic growth, says Moody's, should in turn help boost corporate profits by an expected 17.1 percent in 2021 – a dramatic turnaround from the 13.8 percent decline of the past 12 months, and reason for optimism about a return to the aggressive capital expenditures so critical to an eco- nomic rebound. Slow & Steady Improvement For most businesses, the return to normal should be gradual. During the first half of 2021, many households will continue to self-quarantine as a wave of bankruptcies boosts the number of permanent job losses. However, by summer, things should look different, Koropeckyj predicts. "The economy will regain its stride in the second half of the year, when a vaccine or treatment is assumed to be widely avail- able," she says. Business owners seem to share Moody's optimistic mindset. "Even though there's still a lot of uncer- tainty out there, many companies have a positive outlook," says Tom Palisin, executive director of The Manufacturers' Association, a York, Pa.-based regional employers' group with more than 370 member companies. "Maybe they're being overly confident, but our members seem to feel that in six months' time things will have turned around significantly." With its diverse membership in food machinery building, fabrication, processing and defense, the Pennsylvania trade group can be viewed as a proxy for American industry. The organization's members are reporting results that seem to position the tail end of 2020 as something of a springboard for future months. "Conditions for our members have improved, with increasing revenues, since the April and May timeframe," according to Palisin. Springboard or not, it's likely that many businesses outside of the RV industry will not regret seeing 2020 in their rearview mirrors, with many businesses resorting to furloughs and layoffs to maintain operations while dealing with supply chain problems (see related story on page 68). Palisin acknowledges that for many operations, the road ahead will be rocky – especially for those companies with lim- ited resources. Housing Surges Continue An important driver for the economy at large, residential construction is doing extremely well, and promises more good news in 2021, experts say. "Housing demand has bounced back thanks to very low mortgage rates and the release of pent-up demand," says Koro- peckyj, who points to healthy builder con- fidence as the nation enters the new year. The road ahead looks sunny indeed: "We forecast housing starts will surge by 20.1 percent in 2021, after falling an expected 5.7 percent in 2020 due to the initial impact lockdown orders had on construction," she Forecast 2021: A Return to Normalcy Experts say businesses can look forward to an increasingly favorable operating environment in 2021 as the economy gradually rebounds from the effects of the COVID-19 pandemic, particularly if a vaccine can be ready by mid-year. By Phillip M. Perry

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