Mastercard Chief Economist Bricklin Dwyer joins Yahoo Finance Live to break down how the pandemic has accerlerated businesses to move digitally and break down the latest consumer trends.

Video Transcript

JULIE HYMAN: We've been talking a lot about 2021 outlooks here on the program. We want to bring in someone who has a perhaps unique perspective on that question. That is Bricklin Dwyer. He is the chief economist at Mastercard.

And I say that because, of course, there at Mastercard, you guys have access to a lot of spending data. And you're constantly sort of crunching the numbers. You do spending pulse surveys.

And so given that, given what you have seen in terms of how much people are spending, what they're spending on, you have invoked that sort of buzz phrase of pent-up demand, right? So what does that-- the unlocking of that pent-up demand look like in 2021? How is that going to play out?

BRICKLIN DWYER: Well, we've really seen some fantastic trends emerge during the crisis. It's been largely unlocking a lot of the existing trends that we saw before the crisis and really amplifying those as we moved into the later end of this year. Those trends were the shift to digital, which I know you were just talking with the CFO of Zoom. I mean, clearly, these trends that we've seen emerge have been very real and very big.

That shift to digital, which has been companies investing in digital, and also e-commerce, which has really jumped and leaped into the future of what we've seen. Using our data looking at information we see around the world, we see that about 20% to 30% of that shift to digital is going to stick around more permanently. And that really is at the core of our view and the core of how we're looking at the future.

We see the initial spike, where everybody goes online. And then now that everybody has kind of adopted this environment of using Zoom for different things, using different platforms for different ideas, and trying to think about what does the world look like? How much of these new technologies can we really embrace and adopt? I'm sure all of you can see that in your own personal lives. And our expectations are that quite a bit of that will be sticky.

BRIAN SOZZI: Bricklin, if, in fact, consumers do go out there and spend, spend, spend next year and unleash that pent-up demand, really, you and a lot of other folks are out there talking about what could GDP growth in the US look like? Are you thinking it could be over 5%?

BRICKLIN DWYER: So there's a lot of factors to consider here. When we think about that digital transformation, we think about the vaccine and other therapeutics and what they bring to the table, they really unlock that pent-up demand, as you mentioned. That pent-up demand, I think we can see it around us, where the retail economy has really recovered. The T&E economy still has quite a ways to go.

But it's a bit more nuanced than that. We're really experiencing this multi-speed world. So focusing on the top-line number is really kind of missing out on some of these more nuanced trends. And those nuanced trends are that digital versus non-digital, the localized travel versus the cross-border long-haul travel, these are areas that are likely to outperform. And so we kind of break it down that way and look at what areas are we seeing a lot of momentum and growth and what areas are going to take a bit longer to recover?

MYLES UDLAND: You know, Bricklin, your colleagues on Wall Street have written a lot about the need for additional fiscal stimulus. I'm curious, given your vantage at Mastercard, how you saw that flow through spending in the spring and if you have any estimate, maybe, or sense, perhaps, of how much savings is out there and what additional packages could look like, at least as they flow through on the spending side?

BRICKLIN DWYER: Yeah, it's a great question. And every time we get fiscal stimulus, I feel like we go back to the drawing board and figure out what does this fiscal package mean? Because they're always so different in terms of the transmission channels, whether we're talking about direct payments, whether we're talking about loan guarantees. And so it really is a different construct each time.

And this time around, it was no different. We went back to the drawing board to figure out one, how are these things translating? We saw this big increase in direct payments to individuals, the stimulus checks that went out, and then unemployment benefits and top-up programs that we saw. Then we saw the interruption and then the re-engagement as the federal government deployed additional stimulus.

What was really interesting during this, as you point out, is that savings picture. Initially, we saw that big increase in people's savings accounts as that stimulus money went out. A lot of that money went out vis-a-vis electronic payments or e-commerce channels, which was fantastic to see that kind of momentum. And that really comes as an economy that had developed that capability over a number of years. So that was good timing in that sense, that we were able to really rise up and push a lot of that spending online.

What's really interesting now is stimulus on the way in tends to really prop up consumer spending. We get that initial round of stimulus effect or growth effect. And then on the way out, we like to talk about the expiring of fiscal stimulus as more of a cliff.

But really, it acts as more of a slope. It gradually reduces over time because of that savings effect that you mentioned, where consumers do have different levels of savings. You may save more than me. And so that ends up smoothing out a lot of the impact of the expiration of fiscal stimulus.

But make no mistake. We still are in an environment right now where we need more fiscal stimulus to really get us between now and when that vaccine and therapeutic deployment really happens.

JULIE HYMAN: Right. We need the slope to end later rather than earlier. Bricklin Dwyer, thanks so much for your time, Mastercard chief economist. Appreciate it.