The pestilence of 2020 has been a potent reminder why I don’t make predictions for the coming year in my year-end column. Few (besides the Obama administration, which established a pandemic response team and playbook later discarded by President Donald Trump) could have seen this deadly event coming.
So, cautiously, here are my markers on topics that could be prominent in 2021:
COVID-19: The near-term outlook depends on vaccines that are already being rolled out. It will be a difficult winter. Mutations of the coronavirus, spotted in the United Kingdom, are a concern. Returning to the way we lived, worked and played just a year ago will be a long trail.
It won’t happen in 2021, when even once vaccinated we will wear masks and practice social distancing.
Bill Gates, however, is optimistic. On his blog he wrote, “When I think back on the pace of scientific advances in 2020, I am stunned. Humans have never made more progress on any disease in a year than the world did on COVID-19 this year. Under normal circumstances, creating a vaccine can take 10 years. This time, multiple vaccines were created in less than one year.”
Watch for: the effectiveness of the vaccine, lower levels of infection and growing confidence.
Economic fallout: Even if a vaccine is successfully deployed, the damage from the pandemic will linger.
As of December, U.S. employment remains 9.8 million jobs below its pre-COVID peak. The spending by consumers on services has recovered only 66% of the losses from the spring lockdown. The pandemic’s current, more deadly wave promises to reinforce and worsen this disruption.
COVID-19 hit around the time that the business cycle was due to turn down after the longest expansion in history. The two events threaten to work together and reinforce each other.
Many sectors face a long comeback that may not materialize next year. Among them are many critical to Seattle: tourism, hospitality, conventions and air travel — hence demand for Boeing’s jets. Cultural institutions have also been badly wounded. The cruise industry — burning through $1 billion a month during this year’s shutdown — is unlikely to see a new season.
City and state budgets have been savaged. So has public transit. Neither has received adequate help from the federal government.
The Federal Reserve has room to continue using interest rates and monetary policy to prop up the economy. Inflation is not a danger, although some are worried about potential dollar depreciation versus other currencies. Stephen Roach, former chairman of Morgan Stanley Asia, went so far as to warn, “The era of the U.S. dollar’s ‘exorbitant privilege’ as the world’s primary reserve currency is coming to an end.” I think he’s wrong. If he’s right, it would have serious consequences for American living standards.
On the other hand, if the vaccine works and confidence returns, the economy might see a remarkable growth spurt. The argument for this outcome includes pent-up demand and household finances being in generally good shape. I worry this outlook is too optimistic.
Watch for: more fiscal stimulus that eases pain and increases demand, along with whether — and how fast — the economy recovers.
The future of work: This year unleashed numerous predictions that remote work has changed everything forever. The end of the central business district! The death of cities! People can do meetings via Zoom and other platforms while performing their jobs from anywhere! Business travel will never return to its old levels!
Therapists rightly warn against words such as “everything,” “forever” and “never.” Maybe COVID-19 provided the inflection point where remote work employs a significantly larger share of the workforce than before. Whether those workers can be as productive and innovative in virtual isolation is a big question.
About 1.5 million Americans were employed in driving trucks as of October; 1.3 million in warehouses — all essential to the supply chain. A year ago, before the pandemic hit, 12 million worked in restaurants and bars. Most work can’t be done remotely.
As for the sectors that lend themselves to telework, I’m skeptical that most people want to be electronically linked hermits.
In the long run, most thrive on human interaction and the “creative friction” that generates ideas in places such as South Lake Union. Restaurants and small businesses depend on these larger companies.
Watch for: when and how companies return to more normal work practices, say working partially from home, partially from the office. These trends probably won’t gain traction until later in 2021.
Downtown: The loss of office workers, along with looting and crime, ravaged the central core of Seattle this year. The Downtown Seattle Association tracked 152 street-level businesses closed permanently this year in the core, out of 214 citywide. Some are iconic (Bergman Luggage), others essential to the downtown residential population of 88,000 (Kress IGA).
Downtown also generates 51% of the city’s business taxes.
But downtown’s not dead. A South Korean group spent $669 million for a 95% stake in a new tower this month. Construction is also underway on the 48-story First Light condos at Third Avenue and Virginia. Every successful metropolitan area boasts a vibrant downtown.
Cities aren’t dead, either. As New York Times columnist Farhad Manjoo wrote: “They are indispensable as engines of economic growth, catalysts of technological and cultural innovation — and they are one of the most environmentally sustainable ways we know of for housing lots of people.”
Watch for: Much will depend on the virus’s pullback and employees returning. Also: The city must take crime (and not only downtown) seriously.
Politics: Nationally, President-elect Joe Biden’s incoming administration promises to “build back better” in a spectrum of public health, infrastructure and racial equity.
But if Republicans retain control of the Senate, expect Majority Leader Mitch McConnell to work at sabotaging the Biden agenda. Now Republicans are deficit and debt hawks again (about the red ink they drove up with tax cuts for the rich and corporations). Austerity would be ruinous to recovery.
In Seattle, City Hall is controlled by a left as extreme as the GOP right. It seeks to defund the police without a serious Plan B. A majority on City Council is hostile to Seattle’s competitive and recovery needs. A backlash is coming. But things may have to get worse before it comes.
Watch for: Steve Jobs said, “The axis today is not liberal and conservative, the axis is constructive-destructive….” Let’s hope for constructive policies.
Climate change: Biden promises to return the United States to the Paris climate agreement and reinstate the environmental rules reversed by the Trump administration. But the nation has lost four precious years in addressing this existential crisis. The world lost American essential leadership.
This year is on track to be the hottest on record globally. And 2021 might be worse. The costs from inaction vastly outweigh our current sleepwalking to catastrophe.
What to watch: whether the federal government restarts serious efforts to lower emissions and build consensus on a gradual path to “de-carbonize.”
If I were in the prediction business, I’d cover my bases after 2020 by warning of the possibility of an asteroid strike. But I’m not, and we have a Space Force, right?
Wishing you a better and healthier new year.