For much of the global economy, the first quarter of 2021 resulted in stable but underwhelming conditions. The late 2020 increase in trade, retail consumption, and even hard-hit sectors such as travel plateaued slightly in the first months of this year. But economic recovery gains have just begun to emerge and are poised to trend upward throughout much of the market. With the release of the latest government stimulus package, the U.S. is expected to see its biggest economic gain in recent years and 2021 is predicted to be the most significant positive economy for years to come.
One of the more significant areas of inclusion for the second quarter of the year will be trade. Global trade and domestic purchasing have been on the rise since late 2020. This trend is expected to continue with massive increases in the few months ahead leading into the typically slower summer months. Despite the delays from the nearly week-long Suez Canal situation and the resulting port delays, global trade appears to be finding a new pace. Major ports have increased their workload and international logistics operators are continuing to see accelerated growth. As airlines focus more of their 2021 loads on people rather than cargo, other shipping mechanisms will need to pick up the slack.
Despite the uptick in global trade, the U.S. continues to widen its trade deficit with more goods coming in than leaving the country. This is primarily due to increased consumer demand for goods coupled with a necessity for price consideration. International communities are, for now, less willing to purchase American goods while many financial and economic unknowns continue to loom.
At the beginning of the year, the threat of recession in the coming months was a noteworthy economic factor. In January it was predicted that the chance of a recession in 2021 was as high as 25 percent (S&P Global). But with news of the Fed holding off major interest rate increases until at least 2023, the risk of recession has slipped to 10 to 15 percent in the year ahead.
Unemployment continues to impact slowdowns in economic spending. Though the unemployment rate has decreased over the past few quarters, it has not yet reached a pre-pandemic level despite the increase in job creation over the past few months.
This is an unusual year for the industry in that it is not nearly as linear as most years. Traditionally, with industry shows and yearly planning taking place in January, the industry witnesses a buying increase during the first quarter. But with virtual shows and lingering economic unknowns, that was not the case during Q1. However, late in the quarter and already in the second quarter the industry appears to be back on track.
With more states decreasing their COVID restrictions and with the vaccination rate of American’s continuing to rise, the industry is primed for growth. Small businesses look to be in the most immediate need of helping to bring people back and will therefore be looking to thoughtfully spend on promotion. Corporate spending is also beginning to return to pre-pandemic levels concerning promotional goods and that trend should continue throughout the quarter ahead.
by Seth Barnett, VP Content Development