Nov. 20 (UPI) -- The U.S. economy will bounce back to its pre-pandemic levels by the end of next year with GDP growing by more than 4% during 2021, University of Michigan analysts predict.
The expected growth of 4.2% would more than make up for this year's 3.6% year-over-year decline in GDP, but the forecast is dependent on a successful COVID-19 vaccine becoming available fairly soon, according to the school's annual U.S. Economic Outlook released Thursday.
U.S. drugmakers Pfizer and Moderna have announced encouraging clinical trial results for their COVID-19 vaccines and are aiming to roll out millions of doses as early as next month, prompting the Michigan economists to note that "the efficacy of their vaccine candidates lifted markets and, surely, some spirits.
"Our forecast assumes that a vaccine will be available to workers on the front lines by early 2021, with wider availability by summer 2021."
GDP growth will wane to 3% in 2022 as federal support is scaled back, they said.
Employment was forecast to continue to recover during the next two years, ending 2022 only 800,000 jobs below pre-pandemic levels. Unemployment will decline from 6.9% in October to 5.6% at the end of next year and 5.1% at the end of 2022, they predicted.
The recovery won't be shared equally, however. State and local governments hit hard by a drop in sales tax revenue due to the pandemic "will need to tighten their belts further" while lower-wage, customer-facing workers who took the biggest employment hit likely will have to wait until longer for a recovery, the Michigan economists said.
Car sales, which slowed to 14.5 million units this year, will pick up to 16.3 million units in 2021 and 16.7 million units in 2022, they estimated.
Total housing starts, meanwhile, will rise from 1.34 million units this year to 1.4 million units in each of the next two years, helped along by record-low record interest rates, the U-M economists said.