Page 14 - BusinessWest January 6, 2021

ECONOMIC OUTLOOK 2021 >>
The Big Picture
Economist Says Pent-up Demand Will Be the Key to Any Recovery
By George O’Brien
Bob Nakosteen has an old saying hanging in
a frame in his office at the Isenberg School of Management at UMass Amherst — the one he
hasn’t been in but once since last March.
It reads: “You Can See the Future by Looking at
the Past.”
Nakosteen, a professor of Economics at Isenberg,
said he’s lived by those words, especially at this time of year, when he’s asked to try to forecast what might come over the next 12 months.
Only this time, that saying doesn’t hold. Indeed, while people tend to throw that word ‘unprecedent- ed’ into the mix early, often, and sometimes when it doesn’t actually apply, one could certainly use it with regard to COVID-19, the economy, and any efforts to look into the crystal ball and make some projections.
“In virtually every situation I’ve been in before, you can pick out an historical situation that came close and give some perspective on what might hap- pen next,” he said. “Now, you can’t at all. Even 1919 and the last global pandemic was different; there was lingering demand from World War I, and a lot of global agriculture had been shut down. That really bolstered United States agriculture; we were still pre-
dominantly an agri- cultural country. There were some circumstances that we can’t duplicate now.”
So if people can’t look to the past to project what will happen in 2021, how can they handle that assignment?
“
before, you can pick out an historical situation that came close and give some perspective on what might happen next. Now, you can’t at all.”
In virtually every situation I’ve been in
“Not very easily,” said Nakosteen, who noted there are always question marks going into a new year. This year, they come by the bushel bag, and cover everything from vaccines — how effective they’ll be and when they’ll be widely available — to overall consumer confidence, always a huge issue in determining which way the arrow will point; from the election of a new president to what’s happen- ing in other countries, especially with regard to the pandemic; from the employment scene (specifically, how many of those millions of lost jobs will actu-
ally come back) to whether, and to what degree, Congress keeps printing money and dispensing it to those in distress.
Add it all up, and there is simply too much uncer- tainty to make any real projections, said Nakosteen, adding that, while the country may well avoid anoth- er recession, or the dreaded ‘double-dip recession,’ as it’s called, the eventual shape of the recovery — which has been the subject of endless conjecture, with possibilities ranging from a V to a U to some- thing like a Nike swoosh — is still be to determined. Obviously.
BOB NAKOSTEEN
Your Bank for Business.
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14 JANUARY 6, 2021
ECONOMIC OUTLOOK 2021
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