In 2020, the U.S. experienced its deepest decline in gross domestic product (GDP) production since 1946. GDP production fell by percent in 2020, surpassing the percent decline in GDP recorded in 2009. With the said decline in GDP the US economy has some catching up to do to return to pre-pandemic levels.
Even the growth of the economy in the fourth quarter of 2020 at a rate of 4 percent (in annual comparison) was not enough to compensate for the historic collapse of the American economy in the spring of the same year. However, the outlook for the US economy is rapidly improving. On the one hand, thanks to the increasing number of vaccinations against the coronavirus, and on the other hand, thanks to the fact that Congress approved another giant package of fiscal support in March 2021, this time in the amount of billion. USD.
President Biden has pledged that every American adult will have access to a vaccine by the end of May 2020. However, there are still concerns that new variants of the coronavirus may emerge that are more resistant to existing vaccines, which could hit the US economy again.
Therefore, although the risk of a slowdown in economic development remains, forecasters predict that a faster and stronger recovery of the US economy could begin as early as the second quarter of 2021. GDP growth in 2021 is now estimated in the range of to 7 percent.
To mitigate the consequences of the coronavirus pandemic, the US Congress first released USD 104 billion intended for paid sick leave and unemployment benefits. He also approved the largest economic rescue package in American history up to that time, in the amount of approximately billion. USD (CARES Act).
This includes direct payments to American families, increased unemployment benefits, the creation of a fund to provide loans and guarantees to businesses, states and municipalities, loans to small and medium-sized businesses to cover payroll, grants to airlines and freight carriers and other items.
In addition to the rapidly depleted Paycheck Protection Program (PPP) Loans/Grants (part of the CARES Act), Congress passed a third $484 billion bailout package in 2020 to fund small and medium-sized businesses, to finance hospital operations and strengthening testing. On 20 December 2020, it was announced that an agreement had been reached to provide yet another rescue package of USD 900 billion, bringing the total amount set aside to help the economy in 2020 to trillion. USD.
The latest package in the volume of billion. The USD passed in March 2021 is a key legislative victory for President Biden, who is enjoying a solid start to his presidency. In total, the USA has so far released billion to mitigate the consequences of the pandemic. USD, which represents almost 25% of GDP.
Post-covid-19 opportunities for foreign exporters
Transport industry and infrastructure
Despite the significant impact of the coronavirus crisis on the US economy, massive investment in infrastructure is one of the top priorities for the new US administration. In addition to transport investments in infrastructure to solve congested transport corridors, the development of new technologies that have an economic, ecological and safety aspect is also expected. This particular area could be a chance for Czech companies to enter the local market.
In the next decade, at least as much should be spent on safe and sustainable roads, bridges and airports as on fighting the pandemic. Rebuilding crumbling roads and bridges, supporting aging water infrastructure and expanding broadband in rural areas are important. The plan is also to build and complete the national high-speed rail network, including projects of national importance in California, Texas, New York, the Cascadia region and Florida.
Accelerating the development of low-carbon aviation and ship technology is also significant. In order to reduce emissions, the transition to electric vehicles is a priority. Following this, the construction of a national electric vehicle charging system is being prepared, which expects to build 500,000 public charging stations by 2030. A new generation of low-carbon technologies in freight transport, transport and aviation should lead to net zero emissions by 2050.
Energy industry
According to allcountrylist, the energy industry in the US has not been spared the effects of the coronavirus crisis. There was a significant drop in demand for oil, which led to a drop in both prices and production. With the gradual expected economic recovery, especially from the 2nd quarter of 2021, the situation should improve in this sense, although a lower than usual demand for oil products still cannot be ruled out. In addition, in February 2021, a cold weather wave caused an energy crisis and multiple blackouts in the deregulated market in Texas.
In addition to the crisis, a significant factor is the arrival of a new administration, whose view on energy differs dramatically from the administration of Donald Trump, even though the trend of a gradual transition to clean energy has already been going on to some extent in recent years. Economic recovery and new energy targets create an interesting mix of opportunities, although the emphasis on strengthening the domestic industrial base in line with the “Buy American” principle is becoming increasingly evident.
Since February 19, the USA has again been a party to the Paris Climate Agreement, the new government has frozen new contracts for oil and natural gas extraction and is significantly emphasizing the creation of new jobs in clean energy (of course, primarily in the USA). President Joe Biden has set a goal of achieving carbon neutrality in the US by 2050. The Department of Energy sees a key role in achieving this goal in strengthening research and development and preparing an “energy revolution” in the transition to clean energy.
The shift away from coal should continue even more noticeably, compared to which gas is cleaner, however still a fossil fuel. Therefore, we can expect the continuation of the export of liquefied natural gas LNG, while especially in countries where coal is an alternative, such export leads to the reduction of global carbon emissions. CCS (carbon capture and storage) and, of course, the further development of energy from renewable sources have a perspective, where massive investments in wind turbines, solar panels and network resilience are expected.
In many cases, renewable sources are becoming self-sufficient in the market, for example in Texas, which is the largest producer of wind energy production and has already surpassed coal in the share of the energy mix in this state. On the other hand, perhaps the pandemic that is already dying out may somewhat slow down the onset of new clean sources. There will be a significant boom in technologies based on the use of hydrogen, including use in transport and electromobility in general, whether in the form of clean vehicles, which is related to the production of batteries or recharging/filling stations for alternative fuels.
Overall, batteries as a method of energy storage have huge potential and there will be a lot of pressure to reduce dependence on imports of these components.
Nuclear is also a low-emission source of energy, with the potential for the proliferation of advanced small modular reactors (abbreviated SMRs), which are roughly one-third the size of a typical nuclear reactor, allowing for easier and cheaper construction as well as safety benefits.
There is also research in this area, partially supported by the US government, which is aimed at water-cooled reactors, but the government is also interested in the development of reactors cooled by less traditional means. Reactors can be used for the production of energy, heat, but also for other industrial uses.
The government-funded research program primarily mentions the most advanced project with NuScale Power and Utah Associated Municipal Power Systems, who plan to develop a 12-module NuScale power plant at the Idaho National Laboratory to be operational this decade. The Department of Energy continues to announce grants to support innovative reactor concepts (including small modular) that have the potential to improve the economic outlook for US nuclear power.
Energy saving also plays an important role in reducing emissions, which creates potential projects related to higher energy efficiency (including insulation of buildings, installation of energy-saving elements, etc.) With regard to problems with power outages, great emphasis will be placed on stability, but also on network security, e.g. .against the vagaries of the weather, but also outside interventions, as well as potentially on our own small energy sources.
Therefore, interesting opportunities can be found in these areas, even if domestic producers are preferred, for example through cooperation with them.
Engineering industry
The United States remains the world’s second largest market for engineering products and the second largest industrial producer after China. Even before the pandemic, the US administration tried to create a business environment conducive to the return and further expansion of manufacturing companies in the United States through a combination of tax, trade and regulatory measures. In the post-covid period, further administrative steps can be expected to be approved with the aim of reducing the enormous dependence on imports of, among other things, industrial products and machinery, mainly from China.
It can also be expected that the products of selected industrial sectors will be designated as a strategic necessity, which will help a partial renaissance of American industry. The share of industrial production in GDP decreased to the current roughly 11% in 2019 from 15% in 2005. 60% of the demand for machinery and technology is covered by imports. Demand for machinery will depend on development trends in individual production sectors.
The trend in the post-covid period will be an effort to bring production closer to the local customer (localization of production), either because of the threat of outages within subcontractor chains, or because of concerns about the escalation of trade wars and the related introduction of import tariffs. Of course, such a change will not be immediate and will depend on many other factors.
Entertainment and leisure
While the coronavirus pandemic is completely devastating to the majority of the entertainment industry in the US, its gaming industry is becoming an economic giant and one of the fastest growing industries in the country. The industry saw record profits and spending, and video games were one of the most stable growth categories in terms of popularity and investment. Video games are more than just an entertainment industry, they are reshaping the way we interact with the world during the pandemic.
Total consumer spending on the gaming industry reached $57 billion in 2020 (according to NPD’s annual report), up 27% from 2019. An analysis by Research and Markets, titled United States Video Game by Category, states that the United States they also have the largest representation in this field in terms of number of employees.
The position of leaders of the video game industry has been occupied for a long time by three companies – Sony, Nintendo and Microsoft. These three gaming brands are the most well-known in the US, with Nintendo being the most popular and played. Mobile games are becoming the biggest mover lately.
However, the growing trend of the gaming industry may also be a reflection of the development that began even before the pandemic itself, which further accelerated it. If this is the case, then the gaming market may experience continued growth without a post-pandemic hit. Investments in the gaming industry are on the rise, but other segments of the entertainment industry are showing a significant decline. They are affected by the ongoing pandemic, which has limited key categories such as cultural events, hospitality and travel.
Healthcare and pharmaceutical industry
The pandemic has thrust the already robust healthcare and pharmaceutical industries even further into the spotlight. Sufficient protective equipment and the success of the research, or of production related to medicines or vaccines against covid-19 has become a criterion for the success of saving a large segment of the population and for the timeliness of abandoning restrictive measures suffocating the economy.
The dominant theme at the end of 2020 was the start of a large-scale vaccination campaign in the USA, which continues relatively quickly and successfully, and thus contributed to the positive turn of the situation in the USA after the second fall wave of the coronavirus. During the first wave, the USA, like other countries, suffered from a lack of protective medical equipment (gloves, respirators, protective suits, etc.).
Even in light of this shortage, Joe Biden signed an executive order in February 2021 to make supply chains for critical products in the United States more resilient and secure. Healthcare is one of six sectors where an in-depth analysis of the entire industrial base will take place.
It is therefore necessary to count on a strong emphasis on the self-sufficiency of the USA, but at the same time, perhaps also with opportunities for suppliers from “friendly” countries. From the point of view of the USA, the risk to self-sufficiency is primarily the concentration of the means of production in the hands of states such as China.
Due to the overall high investment in the very expensive healthcare sector in the US (which is expected to continue to grow up to one fifth of GDP in the coming years, while part of the anti-crisis stimulus packages, including the latest one signed by President Biden on March 11, 2021, is also going to the healthcare sector), there are opportunities for Czech manufacturers, e.g. in the field of medical equipment, if suppliers are able to produce at competitive prices.
The Czech healthcare and pharmaceutical sector is certainly not unknown in the USA, as evidenced by, for example, the investment by Novavax, which last year bought Praha Vaccines, a company producing vaccines and other biological material, for USD 167 million. A key component of the new vaccine against covid-19 is being produced in Jevany in the Prague-Východ district. Any partnership regarding vaccination and the fight against covid-19 in general is a logical priority for the US government.
Agricultural and food industry
The covid-19 pandemic in the US (as well as in other parts of the world) has fundamentally accelerated the growth of the health food and food supplement segments. The driving force is consumer demand for a healthier lifestyle and diet. In addition to the coronavirus, the fundamental reasons include the long-term unsuccessful fight against obesity or cardiovascular diseases and other civilizational ills.
If we add to this a relatively expensive health care system, Americans are forced not only by trend, but also from a practical point of view to place greater emphasis on prevention. From the segment of healthy nutrition, it is therefore appropriate to mention products based purely on plant-based raw materials (so-called plant-based), i.e. plant-based alternatives to e.g. meat or dairy products. A number of global producers have already responded to the growth in demand with massive investments in the development and improvement of taste and nutritional properties, which indicates the obvious potential.
When it comes to food supplements, demand is growing not only for classic sports supplements (vitamins, minerals, proteins), but also for products with an anticipated positive impact on immunity. A notable trend in this segment is the targeted personalization of accessories according to the individual needs of the consumer.
Naturally, products with a certain relationship to solving the aforementioned health risks or, for example, their composition is based only on plant-based ingredients, have a greater chance of success.
