The economy Joe Biden will inherit as president in 2021 could be headed toward a historic boom or a disappointing bust.
Two factors are most likely to determine the outcome: The rapid and effective deployment of coronavirus vaccines, and further stimulus injected into the system to sustain the nation through a brutal winter and spring.
The first Covid-19 vaccine began getting to recipients Monday with two more perhaps available by February. But delivering the vaccines to hundreds of millions of Americans — and persuading enough people to take it — will be a massive challenge. Keeping everyone afloat until then requires Congress to provide far more stimulus to a slowing economy slammed by fresh virus breakouts and lockdowns.
“The entire policy response has been to bridge businesses and individuals to the other side. The vaccine is the other side,” said Harvard Kennedy School economist Megan Greene. “If we can’t roll it out effectively or we don’t continue to bridge even further until it’s rolled out then it would be very difficult to avoid another recession.”
Stumbles on the vaccine or stimulus fronts could knock the economy and markets back into turmoil, making the incoming president’s first year a nightmare. But if the perfect scenario plays out — consistent aid to struggling Americans and businesses, and successful vaccine distribution and adoption — Biden could preside over a remarkable boom in an economy with enormous pent-up demand from Americans desperate to return to their normal lives.
“If we get enough stimulus to replace missing purchasing power like we got during the first Covid wave, then we can reasonably expect a very sharp bounce back,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “And it could be even sharper this time if the vaccines give people reason to believe that this thing is actually over. We just need to keep the patient on life support until we get there.”