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Economic Growth of 3 to 5% Expected in 2021

Lukas Partners supports Creighton University Economics professor Ernie Goss, Ph.D, to create and distribute a monthly video that summarizes his Mid-America Business Conditions Index, a survey of supply managers. This is a leading economic indicator for the nine-state Midwestern region that stretches from Minnesota to Arkansas.

You can view Dr. Goss’ January recap video at:

In his monthly video recap, Dr. Goss said January 2021 was a healthy month that signaled the economy is moving in the right direction. The Mid-America Business Conditions Index and Business Confidence Index increased from December’s reading, but was still down from pre-COVID-19 levels. The Mid-America reading was in line with what has been reported at the national level.

While hiring was down slightly in January, things look better for the manufacturing sector, especially as vaccination numbers improve.

While Dr. Goss said economic growth won’t be very strong in the first quarter due to continued lockdowns and school closures, growth for the overall year is anticipated to be 3 to 5%.

Additional January 2021 insights are:

-Short-term interest rates are still at record lows, while long-term interest rates have increased. Dr. Goss anticipates an increase in short-term interest rates in the second half of 2021.

-Dr. Goss expects the $1.9 trillion stimulus package to pass, which will determine overall economic growth for the year.

-Exports have improved due to competitive prices abroad, while imports have declined. This can be attributed to the decline in value of the U.S. dollar.

-There was a staggering jump in inflation, which has increased commodities and costs for construction materials and metals.

-There needs to be a reduction in first-time claims for unemployment insurance. There are currently 800,000 to 900,000 claims. Dr. Goss would like to see claims between 200,000 to 300,000.

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