Economists Predict 5.3% Growth in 2021
If there’s one thing to celebrate in 2020, it’s that it’s over. While the year turned out to be not half bad for car dealers, with some making record profits, it has been… unpredictable to say the least.
As we enter 2021, a return to normalcy is looking closer than ever. Vaccines are arriving, consumer spending has recovered to 98% of pre-pandemic levels (CNBC), and a second stimulus package is expected early in the year.
Better yet, economists are forecasting gross domestic product (GDP) will grow next year by up to 5.3%. With sights set on a rosy future, dealers have to decide how they will capture customers in 2021.
By the Numbers: What’s in Store for 2021’s Economy
Across the board, analysts predict that the American economy will grow substantially next year. The Congressional Budget Office sees GDP increasing by about 4%. Recently, Goldman Sachs predicted GDP will grow by an impressive 5.3% in 2021. The financial firm attributes this growth to a rebound from the COVID-19 pandemic and another round of stimulus funds from Congress.
The magic number must be 5.3%, as that is also what Goldman Sachs predicts for next year’s unemployment rate. That figure is down from unemployment’s current rate of 6.9%. Even with such a recovery, economists do not expect the Federal Reserve to raise rates until early 2025. This will be advantageous to auto financing and may spur even better sales as customers continue to enjoy lower interest rates on big purchases.
Related: How are Automotive Customers Shopping in a Pandemic?
Sit Back or Step Forward: Choose Your Strategy for 2021
The future is looking brighter. However, it will take some time before we get back to a fully pre-pandemic way of life. Our advice to dealers is to continue with the strategies that have worked in the second half of 2020. Thanks to increased demand for SUVs and rising used car prices, many dealers have had excellent months this year. Now is not the time to pivot from those reconfigured strategies.
To take advantage of the growth that’s coming, start the year with strong messaging. Focus on mediums like streaming TV and Facebook advertising. Both have experienced double-digit increases in users during the pandemic. And even with new options like at-home test drives and unemployment insurance, remember that price is still the number-one motivator for buyers (SAM Market Study, 2020).
Now is the time to go full throttle with spotlighting your dealership. Get yourself in front of customers, and prepare for the wave of economic growth that is set to arrive in 2021.