December 14, 2020
Our work suggests that there are many reasons to be optimistic about the broad economy going into 2021. In this article, we will focus on three. First, monetary and broad financial conditions, which are our primary forecasting tools, look very healthy. For example, after spiking to reflect the difficult conditions during the lockdowns this past spring, the Chicago Fed Adjusted National Financial Conditions Index has settled down to more normal levels. We think this quick recovery in financial conditions has been a major contributor to the broader economic recovery we have seen thus far. Furthermore, we expect that the recession of 2020 will be judged as the shortest recession since records began in 1854.