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2021 was an eventful year for business news, from chip and labor shortages to cryptocurrency and GameStop stock going to the moon. C2FO has you covered on the biggest moments of the year.
If you thought 2020 was unprecedented, then 2021 probably upped the ante by serving up big stories, moments and trends that will have a lasting impact on businesses for years to come.
We think it’s incredibly vital to understand these events and how they may sculpt your future business decisions. Below, we cover a handful of important pivot points in 2021, reasons why they happened and how they are shaping the world around you.
If you are having trouble buying a new car or truck right now or you are trying to snag the newest (and scarce) Nintendo Switch OLED and PlayStation 5 video game systems, your woes most likely are linked to the ongoing semiconductor chip shortage.
There are various reasons for the chip shortage, including the initial COVID-19 pandemic lockdowns last year that saw manufacturing factories and even seaports close for extended periods of time. For example, Yantian, an important port in Southern China, shut down in May, closing down for almost a week due to a COVID-19 spike. That port handles over 90% of the world’s electronics, sending a ripple effect through various industries.
As people adjusted to working, learning and playing from home, people demanded more personal computers, their peripherals, gaming consoles and other consumer electronics – putting further stressors on the chip problem.
A fire and the weather are other reasons for the chip shortage. A blaze in March damaged one of the manufacturing plants of Japanese semiconductor firm Renesas, which supplies Honda, Nissan and Toyota, among other clients. Extreme winter weather in Texas forced the closure of NXP Semiconductors’s Austin plant in February. Severe droughts in Taiwan also took out chip plants, which pump out 63% of the world’s computer chips and rely on water as part of the manufacturing process.
While the unemployment number in the United States sits at 4.2%, according to the latest job reports, the Bureau of Labor Statistics (BLS) has stated that about 12.7 million people left their jobs this summer, and Goldman Sachs said 5 million people are not working and not looking for work. This Great Resignation is the “largest mass resignation the US has seen in the two decades since the government started documenting them,” according to Business Insider.
And it’s not just America. There is a labor shortage happening across the world. Places like Australia and Israel have recorded double-digit increases in job vacancies, according to a report by Deloitte. For example, there are 30% more manufacturing job openings in the United Kingdom compared to pre-pandemic times.
So, what’s going on?
Analysts say the labor shortage is due to a number of factors, which include droves of people retiring, people who have become hesitant to look for work due to the pandemic, and mismatches between workers and employers, whether on skills, needs or wants.
Of the millions of people not looking for work in America, 3.4 million of them are retirees and early retirees who threw in the towel during the pandemic. The pandemic is also still deterring people looking for work because of challenges in arranging child care and, of course, the fear of catching COVID-19, among other reasons. BLS estimated this cohort of people at 1.2 million.
Economists also say there is a mismatch between the labor force and employers. Some businesses are looking for college-educated people, but software resume programs may be filtering out otherwise well-qualified workers who don’t have a four-year degree. Also, some analysts say the pandemic has made potential employees more choosy about jobs. They may want higher pay, flex work schedules, or remote or hybrid work to accommodate their families.
As the pandemic chewed up and rejiggered major parts of the economy in alarming ways, the US federal government stepped in with stimulus money to keep the lights on at many businesses. In March last year, the US Congress approved $2.2 trillion in emergency stimulus and followed that with the American Rescue Plan Act of 2021 that infused $1.9 trillion more into the economy.
The 2021 stimulus accomplished several key objectives in order to accelerate the recovery of the business climate: The act extended expanded unemployment benefits for people until September, sent $1,400 to people who qualified under certain income levels, provided a tax credit to employers that give paid family and sick leave, extended the expiration for an increase in food stamp benefits, offered tax credits on dependent children and child care, and provided additional funding for businesses.
Funding for businesses included a carve-out of $28.6 billion to help out restaurants hurt by the pandemic, infused an additional $7 billion into the Paycheck Protection Program, and portioned out $1.25 billion for concert halls and other performance venues.
In an investment that will ultimately yield fruit and turbocharge private enterprise in the years to come, Congress also passed the big $1.2 trillion infrastructure bill in November. Included in the provisions are improvements to bridges, roads, trains, waterworks and energy systems as well as an effort to bring broadband to underserved areas.
Beyond the shores of America, other countries continued stimulus policies from last year, such as Hong Kong approving $15.5 billion in April and the UK with $91.7 billion in March, according to various news reports.
COVID-19 was a challenge on multiple fronts, especially for the medical field. There was a global need for medicine and vaccines to combat this threat, while economies suffered from mass infections and lockdowns. The global scientific community pulled through, and vaccines and medicine to fight COVID-19 became available. As a result, stringent lockdown requirements have eased in many parts of the world.
COVID-19 was a setback in many ways, but it also presented opportunities to innovate in medicine and science. Early days of the pandemic saw teams racing to decipher the genomic sequence of COVID-19, and drug companies like Pfizer and Johnson & Johnson marshalled their forces to put together vaccines to fight the disease.
2021 was a momentous year in that scientific efforts started to bear fruit. For example, Phase III clinical trials for the Moderna vaccine for COVID-19 showed a 94% efficacy in preventing infections.
In countries like the US, central to local government officials participated in one of the biggest vaccine rollouts in history, with more vulnerable populations, such as the elderly and immunocompromised, getting priority. Vaccination rates remain spotty, but the number of fully vaccinated people is growing. Here are a few examples: In the US, the latest stats show that 60% of the population is fully vaccinated. Mainland China is at 80% while Russia is at 41%. One of regions with the lowest vaccination rate is Africa, with rates in the basement at sub-1%, according to The New York Times.
In developed countries, increased vaccination rates have led to easing of lockdowns and some semblance of normal life with bars, restaurants and concert halls once again seeing the return of happy patrons.
In addition, this huge technological leap in vaccine development, especially when it comes to mRNA vaccines, will most likely yield fruit in fighting cancer and other illnesses, according to The Atlantic.
While cryptocurrency has been a hot topic around the water cooler and countless internet forums for several years, 2021 appeared to be the year when the average investor took big notice of Bitcoin, Ethereum, their brethren and adjacent technologies such as blockchain. Coupled with cryptocurrency going mainstream was the huge surge in interest in investing apps such as Robinhood and the parallel explosion of GameStop and AMC stock.
At the tail end of last year, Bitcoin started making its meteoric rise from $18,353 in late November to its biggest high yet of $68,521 on Nov. 5, 2021. Along the way, Ethereum rose in price as well while other altcoins, most notably Dogecoin (logo is an adorable and cuddly shiba inu), had their turn in the sun. Elon Musk’s wildly seen tweets on Dogecoin helped it climb in price this year and made instant Dogecoin millionaires all over the world.
The other big sign of cryptocurrency going mainstream is El Salvador giving bitcoin the status of legal tender in September. El Salvador also plans on building Bitcoin City, which will be at first funded by bitcoin-backed bonds.
Besides these big newsmakers, artists and investors made a mad rush into NFTs, or non-fungible tokens, that live on the Ethereum blockchain. Artists to ordinary folks can turn any image into an NFT. The high point for NFTs was reached in March, when digital artist Beeple bagged a staggering $69 million at Christie’s in an online auction for one piece of NFT artwork alone.
And let’s not forget investing apps going wild this year. Average Joes got into investing in a big way by signing up for Robinhood, Webull, Fidelity and other platforms. Many of these newbie investors became avid members of the infamous Reddit forum r/wallstreetbets — its motto “Like 4chan found a Bloomberg terminal.” Investors pumped up companies like GameStop and AMC in an effort to stick it to hedge fund managers shorting the stock while making a mint at the same time. Their actions reverberated so loudly that news outlets, from CNBC to The Wall Street Journal, took big notice.
As 2021 draws to a close, many of these big trends and events may continue or fade, such as the labor and chip shortages and the need for government stimulus. But brighter days are undoubtedly ahead as increasing numbers of people get vaccinated and world economies adapt to this brave new world. Will 2022 be just as interesting as 2021? Stay tuned.
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