On the one hand, after the devastation and uncertainty wrought by the onset of the coronavirus pandemic in 2020, the speed and magnitude of recovery in many parts of the economy were impressive. Unprecedented forms of government stimulus buoyed consumers and businesses, and the rollout of COVID-19 vaccines let people get back to work. Wages rose and the stock and real estate markets reached new highs. On the other hand, soaring consumer prices, shipping delays, and worker shortages stifled the full potential of the comeback. Inflation and the related supply chain snafus have lasted longer than expected, and experts who thought the biggest problem would be having enough job openings have to instead figure out why we don’t have enough people to fill them. Plus, 2021 has had a very uneven impact on people: While many homeowners and stock investors benefited from a surge in the value of their assets, lower-wage earners were more vulnerable to job loss, inflation, unaffordable rents, or even eviction. Here’s what this year looked like through 12 of the most compelling metrics we could chart.
The Job Market
After pandemic lockdowns triggered last year’s massive unemployment, who knew this year would leave workers in the driver’s seat—at least in many cases. The unemployment rate is finally within shouting distance of the 3.5% seen before the start of the pandemic, and the economy has recovered 83% of the jobs lost in the early months of the pandemic, albeit at an unexpectedly slow pace in recent months. But those numbers don’t tell the whole story. Far too many people are not even accounted for in the unemployment rate because they aren’t available to work or aren’t actively looking for a job. They may lack child care, be wary of contracting or spreading COVID-19, or have decided to retire early–as many baby boomers have during the pandemic. That’s left the so-called labor force participation rate well below pre-pandemic levels and the number of job openings per unemployed person at a record high (at least since 2000, when the statistic was first tracked.)
The Economy
While a shortage of people to fill all the job openings has given many workers plenty of leverage and bargaining power, it hasn’t been good for inflation. A lack of people to do everything that’s needed—everyone from truck drivers to day care workers—has contributed to soaring costs that have risen faster and lasted longer than many expected. (The other major factor is a shortage of supplies.) Prices for gas, groceries, and just about everything else have continued to go up this year, and in the 12 months through November, consumer inflation hit 6.8%—the highest in nearly 40 years. Despite those high prices, the economic recovery was full steam ahead—for the first two quarters. Propelled by an increase in COVID-19 vaccination rates, a decline in case counts, and a gush of government aid, people went out and spent money, fueling the juggernaut of the economy: consumer consumption. But then many of the same factors reversed themselves, and growth in gross domestic product slowed dramatically. Less of that government aid and the fast-spreading delta variant of the coronavirus were factors in third-quarter growth falling off. (Forecasts for the fourth quarter show a significant bounce back, though how much inflation and the newly prevalent omicron variant of COVID-19 may impact future spending is uncertain.)
Real Estate
It was a seller’s market in 2021, as anyone who bought a house—or just tried to buy—knows all too well. The year set all sorts of records, including the highest prices ever, the lowest inventory of listings, and the most affordable borrowing costs. Indeed, with many people schooling, working, and vacationing at home because of the pandemic, demand has far outpaced supply, and home prices so far this year have risen almost as much as they did over the two previous years combined. It’s only been in the latter half of the year that we’ve seen some signs of the market cooling a tad, though even then, there were mixed signals. Of the homes that sold, the share that went for higher than their list price hit a record 56.5% earlier in the year and is still well above pre-pandemic norms.
The Stock Market
Sometimes it seemed like the stock market was unstoppable this year, setting new highs day after day, week after week. Even relentless inflation and the specter of the first interest rate hikes since December 2018 haven’t squashed it, though mixed feelings about the emergence of the new omicron variant have caused some impressive swings this fall. In all, the Standard & Poor’s 500 Index reached 67 new closing records in the year through Wednesday (the most for any year other than 1995), while the Dow Jones Industrial Average hit 44 new highs.
