Last spring after the pandemic hit, I predicted we would have a V shaped recovery. Although I received a lot of eye rolling, I still believe that to be true! Read on for my economic predictions in 2021.
Good things are in store for you.
You had a great year in 2020 (most of you did at least), so what comes next for you in 2021?Good things are in store for you in 2021! Read my economic predictions for 2021 here: Click To Tweet
My Economic Predictions:
1. 2021 will be an economic boom.
There is pent up demand in various parts of the economy, and the government has already earmarked money to hand out, and the Biden administration will likely earmark more. They want almost 2 Trillion (with a T), but will likely have to negotiate it down to 1 Trillion.
(Note: I don’t like debt, but this is my prediction.)
2. The government has a steady hand.
Biden has picked Yellen for his Treasury Secretary, and Dr. Charlie Hall is in agreement with me that she is trusted by both sides of the aisle and super smart––she was previously the Chairwomen of the Fed. She will give confidence to the markets, and help us steer past this recession.
3. You will need to pay attention to your clients.
There will be winners and losers after the recession is over, so make sure your clients are among the winners, so they can continue to afford your services.
4. You are lucky to be green.
The green industry will continue to benefit from “cocooning” (spending more time at home) even with more people likely to want to travel by this Fall. This will be reinforced with the new long-term trend of working from home. And, if there is a Green New Deal, it will have a positive impact on the green industry, e.g. tree planting and greenways.
5. The minimum wage won’t max you out.
The new minimum wage of $15, if it gets passed, will get absorbed by our economy and won’t be as big a deal as it sounds. Some states already have this, and other states have H2B minimum wage of close to this or over this amount. If passed, it will likely be phased in, and most areas of the country can handle that.
Just plan ahead if it will impact your costs, so you protect your margins!
6. Taxes won’t be crushing.
The tax increases Biden wants to pass will not be as bad as they sound either, and won’t impact 2021. I predict it will take till 2022 to get pushed through, and that some compromise will be made. Personally, it will impact those earning more than 400k on an incremental basis, and business tax will go back up but remain competitive with other first world countries––and that’s the key, that we remain competitive globally.
Pay attention to the ups and downs.
It’s going to be a great year… Yes, at some point we will have higher inflation and we will have to pay for this higher debt (which I don’t like), and at some point there will be a correction in the stock market and even housing prices…there always is….so my advice, as usual, is to continue to build up a strong balance sheet, while also investing now in smart growth.
As I stated during my Financial Master Class last week, too many companies sit on too much cash and don’t put it to work. Is that you?
Also too many companies don’t focus on their own real financial strengths (the growth areas that will have an extra positive impact on their bottom line). Do you know what yours are?
Invest now and invest wisely, while learning to read your balance sheet and keep it healthy.