October 30, 2021 – The Northeast was the only region that did not fully recover in the second quarter of this year. We had expected this based on our previous estimates, and suspect that by the end of Q3, all regions had recovered to their pre-recession peak level of output gross domestic product (GDP). We lifted our U.S. employment forecast based on strong employment growth through August, as we now expect the nation to fully recover to its pre-pandemic employment levels in the fourth quarter of next year. The South and West will likely lead the employment recovery, since these regions should reach pre-pandemic employment levels in Q2-2022 and Q3-2022, respectively. The Northeast’s reliance on tourism will likely push the region’s employment recovery into Q1-2023. We expect supply chain disruptions to continue well into 2022, likely delaying the manufacturing-reliant Midwest’s employment recovery to lag all other regions.
We estimate that all regions did recover pre-pandemic levels of consumer spending in the first quarter of this year. The South continued to experience the strongest consumer spending recovery among the four regions, with Q3 spending estimated at 9.7 percent above its pre-recession peak. The spike in COVID cases due to the Delta variant’s spread was probably the culprit of a pullback in consumer confidence, which weighed on consumer spending in Q3. However, declining case counts and pent-up demand for services should lead to more robust consumer spending in Q4 across all regions.