Over the past year, the American economy has faced unprecedented challenges. We haven’t seen the likes of COVID-19 during our lifetimes, let alone the financial impact it created for all of us.

When I’m thinking about the U.S. economy, it’s hard not to envision a modern-day version of the most powerful locomotive ever built. Originally a 10,000-horsepower coal-burning behemoth, now converted to clean diesel and electric, a nearly immutable force. However, last year the engine wasn’t able to run on all cylinders and had to undergo some repair. This symbol of America has just gotten out of the shop and is about to be full steam ahead.

The reasoning behind this Great Reopening is fourfold: economic stimulus packages, pent-up demand, record savings, and herd immunity. Let’s talk through each of these economic boosters and why they’re powerful individually and together.

Stimulus packages have made and will continue to make a significant impact. Money continues to pump into the system. In 2020, there were multiple federal government measures to kick-start the economy, including the CARES 1.0 and 2.0 pieces of legislation. Each was huge in its own right. Now there’s even more relief slated for 2021 and on a colossal scale. More money will come through the government economic pipeline in 2021 than came through in 2020.

The current $1.9 trillion stimulus package is arguably the largest our country has seen when looked at as a percentage of gross domestic product (GDP). For comparison, in 2020, the packages tallied out to about 10% of GDP. For 2021, the D.C. money train will be closer to 11% of GDP.

In fact, over the past several weeks, the average family of four who qualified for a stimulus check received $5,600 tax-free. That’s the equivalent to an approximate $7,500 bonus at work! What makes this so interesting is that this year things are already gearing back up at the same time stimulus is hitting.

Pent-up demand is a term I use to capture the feeling American consumers have because they’ve been missing out on “life as usual.” The loss of daily, monthly or yearly pleasures has resulted in tremendous pent-up demand — both emotionally and financially.

Think about it. When was the last time you were able to enjoy social leisure activities? Take a night out for dinner and a movie? Take a vacation? There’s a whole list of social things that have been put on hold or modified significantly. We’ve been missing family reunions and weddings and our grandchildren’s hugs. Atlanta, I know you’ve missed watching the Braves play among fellow fans. And our city is not alone. The same is true for concerts, the symphony and theater.

Record savings levels demarcate the American consumer. Savings in the U.S. hit an all-time high during last spring’s lockdowns (over 30% of income) and have persisted at a high level, now about 20% of annual income. Historically, savings rates have been closer to only 8% over the past decade. I believe a large portion of this savings will quickly flow back into the economy as the nation continues reopening. Americans are champing at the bit to get back to life as usual — and all the fun that comes with it.

Historically, when we’ve hit savings rates above about 11%, the following economic years have been strong. We saw elevated savings in the early 1940s, and for a few years in the early 1970s. What resulted in subsequent years were real GDP growth, payroll growth, and nonresidential investment growth, all at top historical rates.

Herd immunity, meaning when a large part of our population is protected against COVID-19, is becoming a reality more quickly every day. After a vicious winter of increased cases, hospitalizations and deaths from the disease, these numbers are falling rapidly. There are two critical components to why we’re gaining herd immunity: A large percentage of the population has already recovered from the virus, and we are gaining significant ground on vaccinations.

According to MIT data scientist Youyang Gu’s COVID projection model, nearly 140 million Americans already have COVID immunity through vaccinations and/or prior infections.

Life-saving vaccines have come more quickly than many expected, and we’ve ramped up their distribution at a tremendous pace. Pharmaceutical companies produced not one but multiple vaccines to save lives. Most importantly, while there is debate on “efficacy” on each vaccine, they all can boast 100% protection from hospitalizations and death in their trials.

As for getting them to people, on Jan. 10 of this year, we were at about 1.2 million vaccinations a day in the U.S. On March 10, that number had rocketed to over 2 million a day, which is great progress even with many of the vaccines requiring two shots versus one. And that vaccination figure is only increasing.

Herd immunity is real, and closer and closer every day. This truth, stimulus packages, record savings, all coupled with pent-up demand are fuel for the unstoppable U.S. economic locomotive as it starts firing on all cylinders.

The Great Reopening is here. And it will continue to accelerate. More than half of the jobs lost during the pandemic have already been recouped. Most of this job loss was because of government-mandated shutdowns. Now that states are beginning (or have begun) to reopen their doors, people can finally get back to work. Estimates indicate that our growth in GDP will be greater than 7% in 2021. That’s no small feat.

Can you hear that? A train whistle is blowing. Americans are ready for it, and so is the U.S. economy.

Wes Moss has been the host of “Money Matters” on News 95.5 and AM 750 WSB in Atlanta for more than 10 years now, and he does a live show from 9-11 a.m. Sundays. He is the chief investment strategist for Atlanta-based Capital Investment Advisors. For more information, go to wesmoss.com.

DISCLOSURE

This information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, or investment adviser before making any investment/tax/estate/financial planning considerations or decisions.