After a historic, deeply unusual year, a lot remains uncertain about 2021 and what it will bring for major economies around the world. Here are seven indicators to keep an eye on to understand the global recovery as the year progresses.
After real estate prices tumbled and stock markets crashed in several countries due to the 2008 financial crisis, investors turned to commodities. Fueled by cheap lending, the result was an asset bubble. In 2017, the price of base metals fell due to fears about the Chinese economy and its industrial production slowing down, which would result in much lower demand. After bearing the initial brunt of the pandemic, China’s economy has recovered earlier than expected and metal prices have risen again during much of 2020. Central banks have made lending very cheap again too.
During an economic crisis, demand for US Treasury securities goes up, which lowers yields. The Treasury’s bills, notes, bonds, or inflation-protected securities are considered ultra-safe investments because investors have enormous trust in the US government’s ability to pay them back. The recent rise in yield on the 10-year US Treasury note also demonstrates investors’ optimism in the US economy.
The ongoing trade war implemented by president Donald Trump between China and the US has hurt US exports, which fell significantly in 2018 and 2019. But Chinese purchases of US soybeans have risen this year due to relaxed barriers in the trade partnership between the two countries, according to the US Department of Agriculture. However, Reuters reports the rest of the world is expected to import nearly 1% fewer US soybeans in 2020-21 than in the previous year, the first annual decline in nine years.
A sign of strong consumer confidence and economic recovery is more people going out to eat, not just buying take-out or ordering delivery, once indoor dining is relatively safe again. The UK’s summer “Eat Out to Help Out” scheme was an early example of this, helping to boost consumer spending, albeit to muted effect. On the other side of the world, the Australian city of Victoria has recorded more than a month of “double-zero” days—no cases and no deaths—and the New South Wales government is giving residents $100 vouchers for dining to help with the Aussie economic recovery. Restaurant visits in Australia are now higher than they were a year ago.
During the pandemic, e-commerce sales rose with concerns about exposure to the virus while shopping in-person. It crushed sales at small- and medium-sized businesses reliant on in-person shopping, but also led to a rise in e-commerce entrepreneurs.
The labor force participation rate of women has fallen in several countries during the pandemic. Many are women who work in low-wage fields that do not allow for remote work. Many are workers who had to take on childcare duties due to schools shutting down or switching to remote learning. Women who don’t return to the workforce risk sidelining their careers, reducing their savings, and lowering their retirement contributions, despite living longer than men in many countries.
When economies are doing well, the prices of rental apartments in big cities rise due to growing demand from new workers and residents building their careers. The shift to remote work helped drive many high-wage, white-collar workers to less expensive cities for lower costs of living and less urban areas for more space. That means significantly reduced tax revenues in cities.