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From endless winter to new dawn: What might a post–COVID-19 economy look like?

CFO Insights

February 2021

Deloitte’s economists, futurists, and scenario planners recently created four economic scenarios for 2021. In this issue of CFO Insights, we’ll examine these scenarios and their implications for companies and their finance leaders.


The goal posts keep moving—almost as speedily as the virus.

In this case, the goal posts refer to when CFOs expect their companies to return to “normal” post–COVID-19. Back in the Q2 2020 CFO Signals™ survey, almost one-third (32%) of respondents expected to be back to a precrisis level of operations by the end of 2020,1 and 42% agreed with that assessment in the Q3 2020 edition. 2 But in the most recent survey,3 nearly two-thirds of respondents said they do not expect to return to precrisis levels until the second half of 2021 or later, and 26% do not expect to get there until Q1 2022 or beyond (Figure 1 in the PDF file).

Part of the explanation for shifting views is the lack of a clear line of sight into what “normal” will look like. Two critical uncertainties include the government response to the pandemic and its economic consequences and the levels of vaccine distribution and adoption. Further complicating matters is the global nature of the epidemic and the fact that not all countries have responded equally. There’s also the risk that the virus might mutate further or that the vaccine’s benefits won’t last as long as hoped.

Given the multiple variables, several of Deloitte’s economists, futurists, and scenario planners recently created four economic scenarios for 2021 (see “The world remade: COVID-19 and beyond,” February 2021). The scenarios are designed to guide leaders in their strategic, financial, and operational planning for this year. And while they do not predict what will happen, the scenarios offer hypotheses about what could happen. In this issue of CFO Insights, we’ll examine the four scenarios and their implications for companies and their finance leaders.

Four outcomes; two critical uncertainties

Deloitte published its first iteration of “The world remade by COVID-19,” describing several cases for how the virus could reshape business and society, back in April 2020.4 Given that first iteration was developed early in the pandemic and took a three-to-five-year view, however, it became clear that many of those cases could be complemented by a more tightly focused economic view to address some of the immediate concerns of executives.

Each new scenario posits a potential future state leading to corresponding economic implications. And while many CFOs may have already completed their 2021 budgeting and planning cycles, the scenarios offer insights into some of the nuances of the pandemic, as well as possible impacts on the United States, Europe, Asia-Pacific, and global economies. The insights, in turn, can inform midcycle revisions, investment decision-making, and return-to-work estimates and policies—at least for this year. What follows are the economic conditions the scenarios describe:

Endless winter. In this scenario, the high hopes associated with the vaccines are muted by ongoing distribution challenges that result in far fewer shots delivered than the number needed to control the pandemic. Vaccine nationalism and production challenges mean that, globally, dozens of middle-income countries can’t get enough doses and suffer from both slumping supply and demand as a result. Widespread skepticism toward the vaccine means that even places that have access can’t reach herd immunity—and continued mutations spread more quickly than the virus itself. As a result, the pandemic and its restrictions are felt globally far into 2021. Estimated date by which pre–COVID-19 GDP level reached in the United States: Q3 2022; globally: Q4 2021.

Hard rain. After some initial bumps, vaccination programs are embraced, so by late spring, a significant number of people living in advanced economies are ready to get back to normal. One problem: Normal isn’t ready for them. Ineffective policy has meant that many small and medium businesses haven’t been able to survive 15 months of pandemic. Bankruptcies become common, debt burdens have become unmanageable, and there’s a growing wave of defaults. The resulting demand-side shock in some of the world’s largest economies sends ripples around the world. Estimated date by which pre–COVID-19 GDP level reached in the United States: Q2 2022; globally: Q4 2021.

A new dawn. If 2020 seemed to hit one low after another, 2021 turns out to be the antidote. COVID-19 vaccine rollouts grow increasingly effective through the spring. While some people remain cautious about receiving one, herd immunity is reached over the summer for wealthy countries and is on track for most emerging countries. Meanwhile, policymakers and central banks respond with strong stimulus, allowing businesses to remain stable, steadying employment, and maintaining consumer confidence. Moreover, the measures to suppress the virus open the door for economic activity to rebound. The result: a wave of confidence that unlocks new business investment, new consumer spending, and new public infrastructure. Estimated date by which pre–COVID-19 GDP level reached in the United States: Q3 2021; globally: Q2 2021.

Sun showers. The calendar may have turned, but the unexpected lingers. The most disappointing surprise is that, even with multiple vaccines approved, the logistics of reaching billions are unachievable. Weaknesses of distribution, distrust, and a disease that begins spreading faster than the human response are implacable. But another, more positive, surprise emerges: The political conflicts that marked 2020 yield to growing confidence in some of the world’s most influential markets. Strong government support of business and workers in the United States, as well as consistent health mandates, help maintain economic activity. And those supports created through effective policy buy time for the vaccines to make a difference. Estimated date by which pre–COVID-19 GDP level reached in the United States: Q4 2021; globally: Q2 2021.

beautiful scenery

What it means for corporate planning

As CFOs have learned over the past year, forecasting for the short- and long-term impacts of COVID-19 necessitates agile and responsive decision-making under fast-changing business conditions. And that likely requires extensive cross-functional collaboration; real-time, crisis-specific, and business-relevant data and metrics; analytical and forecasting capabilities; and a strategic focus. It also requires expecting the unexpected.

The unexpected remains a critical factor in all of the Deloitte scenarios, and each was developed to reflect two major uncertainties: whether the vaccine is fully implemented in a reasonable amount of time and whether the virus suppression policies (for example, fiscal stimulus, lockdowns, mask mandates) of major governments prove to be adequate. The resulting matrix (figure 2 in PDF file) allows CFOs to:

  • Stress-test their current assumptions. When they finalized their 2021 forecasts, CFOs and FP&A leaders likely made assumptions based on when they thought vaccines would be rolled out worldwide and who would be eligible. Inadequate vaccine distribution, though, may have a chilling effect on consumers who are not comfortable that the virus is behind them—and that, in turn, may negatively affect demand projections.
  • Identify markers of change. The timing of the rollouts may also be an impetus to revisit a scenario. If rollouts slow markedly or simply fail to reach substantial portions of the population quickly, CFOs may need to assess whether they should lower expectations for overall GDP growth in regions critical to the company as a supplier or a market. Vendor relations may be another such marker: lagging receivables, for example, may indicate potential problems 30 or 45 days ahead.
  • Determine appropriate contingencies. Finally, using the scenarios, CFOs can identify the key actions to take depending on which case materializes. For example, how a company manages cash may be very different if the United States returns to a fully functioning market in six months (“A new dawn”) versus nine months (“Sun showers”). 

man balancing on a rope

How CFOs should confront the possibilities

Which of the scenarios will come to fruition? That, of course, remains to be seen. Undoubtedly, many uncertainties will fade as the year evolves. A surer sense of whether the vaccine is being successfully distributed will develop, for example. In addition, the size and scope of the US stimulus package may become clearer, as may any additional European government response.

At the same time, there is the real possibility that the return to “normal” may be uneven at best. Given that scenarios are global in nature, they do depend on what happens within each of the regions studied. Theoretically, vaccine distribution could be very successful in Europe and not in the United States, or vice versa. Additionally, since each scenario is fueled by continued strong growth out of Asia, particularly China, any change in that trajectory would have major impacts on the return to the next normal.

What’s clear is that the scenarios also point to long-term trends that CFOs need to prepare for as they enter that next normal. Patterns of consumer behavior, for example, may have fundamentally changed. In China, online retail sales were up almost 15% in 2020, rising from 4% of sales in 2019 to about one-quarter of retail sales in 2020.5 And it is the companies with strong digital channels to consumers that may have the competitive advantage. Little wonder, then, that in the Q3 2020 CFO Signals survey, two of the great pandemic-related strategic shifts that CFOs mentioned were the acceleration of business digitization, as well as more remote and touchless customer interactions.6

At the start of 2020, nobody would have predicted what was right around the corner: the spread of COVID-19, triggering a lockdown, tripling the federal deficit, and doubling the national unemployment rate. So, even armed with the scenarios, plenty of opportunities exist for variety and surprise before this year is out. Now, however, leaders ought to take decisive action to cushion the shocks and, at the same time, prepare for what may change as the future unfolds. As President Dwight D. Eisenhower famously said, “Plans are worthless, but planning is everything.”


Air jumping

Are the roaring twenties coming back?

Now that we’re well into the decade of the 2020s, and now that we’re starting to think about the end of the worst global pandemic in a century, many people are hoping that the coming decade will compare favorably to the decade of the 1920s. That decade followed a global war and, more importantly, a global pandemic that probably killed about 50 million people worldwide. In the United States, about 700,000 died in a country with a third of today’s population. Several clients have asked me if we’re about to repeat the “roaring twenties.” Indeed, for the United States, the 1920s are often called the roaring twenties on the assumption that there was rapid economic growth, a huge improvement in living standards, and a spectacular stock market, all things we’d like to repeat.

This begs the question as to whether the 1920s did, in fact, roar. Let’s consider the data. From 1920 to 1929, real GDP in the United States grew at a compound annual rate of 4.1%—a spectacular record considering that, during most of the past 70 years, real GDP grew at a compound rate of about 2.7%, and grew more slowly in the most recent decade. Yet the lion’s share of rapid growth in the 1920s took place in the first three years of the decade as the economy was catching up following a catastrophic recession in 1920. If we look at the growth rate from 1919 to 1929, it was only 2.4%, which is decent, but certainly not spectacular. Moreover, GDP growth during the decade was very volatile, with some great years and some years with almost no growth.

Meanwhile, there was net deflation in the 1920s, with consumer prices falling about 15% during the decade, including a sharp decline in farm prices, which pummeled the large agricultural population. Farm foreclosures soared during the 1920s. The twenties were not a time of social stability. The decade saw the revival of the Ku Klux Klan, enactment of racist immigration laws, and strong aversion to global engagement. At the same time, there was indeed an improvement in living standards, as millions of Americans bought automobiles and radios for the first time, and many enjoyed electric power for the first time as well. There was certainly a sense of optimism about the future, which was reflected in the spectacular performance of the equity market, with stock prices tripling during the course of the decade.

In sum, the US economy did not roar, but the stock market certainly did, until it crashed in 1929, ultimately erasing all the gains of the past decade. That is surely something we don’t want to repeat. Meanwhile, the twenties saw the consolidation of communism in Russia and the rise of fascism or authoritarianism in multiple European countries, as well as Japan. It also saw continued unrest and volatility in China. So, in answer to the question as to whether the coming decade will be like the 1920s, my answer is that I certainly hope not. – Dr. Ira Kalish, “Economic Brief: Weighing A Roaring ’20s Recovery,” Deloitte module, CFO Journal, January 26, 2021


1 Deloitte, CFO Signals: Q2 2020, May 2020.

Deloitte, CFO Signals: Q3 2020, August 2020.

3 Deloitte, CFO Signals: Q4 2020, December 2020.

4 Deloitte, The world remade by COVID-19, April 2020.

5China’s retail sales dip 3.9% in 2020 amid pandemic; positive growth expected in 2021,” Global Times, January 18, 2021.

6 Deloitte, CFO Signals™: Q3 2020.

Contact us

Andrew Blau
Managing director

Deloitte Consulting LLP

Ira Kalish
Chief global economist

Deloitte Touche Tohmatsu Limited

Bill Marquard
Managing director

Deloitte Consulting LLP

Lauren Lubetsky

Deloitte Consulting LLP



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Deloitte CFO Insights are developed with the guidance of Dr. Ajit Kambil , global research director, CFO Program, Deloitte LLP; and Lori Calabro, senior manager, CFO Education & Events, Deloitte LLP; and Josh Hyatt, manager/journalist, CFO Program, Deloitte LLP.

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