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Signs of Possible Economic Recovery


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by Gilbert Little
SVP- Commercial Lending


Economic uncertainty has been one of the prevailing themes of the COVID-19 pandemic. Employers and employees alike have struggled to make sense of the various restrictions, which have curbed economic activity across the country.

This begs the question: What are the signs of a possible economic recovery? The answer is not as clear cut as some would like, but here are some potential indicators that the economy may be growing.

Employment and Housing Data

Employment and housing data are tied very closely together. As the unemployment numbers go down, the demand for housing increases. When more jobs are created, more people consider buying a house or moving to a bigger one.

Consumer Sentiment and Spending

The basics of economics - supply and demand - affect consumer sentiment and spending. Consumer sentiment drives the economy. When there is job security and low unemployment, this results in higher spending, and money flow is essential for a healthy economy.

With high unemployment, people fear losing their jobs or don’t have extra cash to spend due to income loss. One area that gets hit the hardest in this scenario is leisure spending. This includes entertainment, restaurants and travel.

The pandemic has greatly changed the dynamics of consumer spending. Activities that put people together in close proximity, such as travel and dining, have suffered due to efforts to combat the spread of the virus.

An increase in spending on leisure activities can be an indicator of a possible economic recovery. If people feel safe, they will be more likely to make a restaurant reservation or go on a vacation as opposed to staying home.

Small Business Activity

Small business owners are typically more financially conservative. They can serve as a good barometer of a potential recovery. If small business owners are concerned about the economy, you won’t see them spending money to upgrade their business.

When they feel good about the future, many small business owners will consider taking out a loan to invest in and grow their business. Monitor small business loan data for any indicators that the economy is on the upswing.

Increase in Travel

Most travel is done for leisure, and business travel is often one of the first expenses to get cut back in an economic slowdown. An uptick in air travel is an especially good indicator that people and companies feel both safe traveling and comfortable with increased spending.

Rise in Dental Visits

An increase in dental visits may seem like an odd economic sign, but it can be a valid indicator. People will often spend money to take care of their overall health before going to the dentist. They prioritize seeing their primary care physician or getting surgery before having their teeth cleaned or spending money on more expensive dental work.

COVID-19 safety recommendations have included curtailing visits to non-essential services like dental cleanings. When you see an uptick in dental visits, it can mean that people feel more secure about their physical safety, as well as their income to spend on non-essential services.

Professional and College Sports

Sports can be another overlooked sign of a possible economic recovery. Economists study different teams and how their wins or losses affect consumer spending. Studies find that if your team of choice is winning, it results in good consumer sentiment, which boosts spending and contributes to a healthy economy.

Here’s to hoping both your favorite sports team and the economy are winning in 2021.



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