It’s that time again, when economists attempt to forecast the upcoming year. But the pandemic, the shutdowns, the reopenings, the damage to business and household finances, the change in locational preferences, and the election have created uncertainties that make forecasting even more difficult than usual.

Instead of a traditional forecast, it makes more sense to look at what could go right for the economy and what might not. The risks are significant, and how they balance out will determine how strong growth will be this year.

So, what are the good, the bad, and the ugly issues facing businesses and households in 2021?

Let’s start with the positive.

The most important concern is controlling the out-of-control virus. We cannot get back to normal until that happens. Thankfully, science has come to the rescue. Two vaccines have been approved and more are on the way.

The issue is no longer whether COVID-19 will be controlled but when. Unfortunately, the hopes of rapidly vaccinating large numbers of people quickly are fading. The rollout has been chaotic and inefficient. If we believe immunologist Anthony Fauci, and I do, it may take until the fall before the nation is largely vaccinated and can return to “near normal,” whatever that will look like.

But the process should improve household confidence, which is still depressed. The near-record savings rate is an indicator of that uncertainty. As confidence grows, so should spending.

Similarly, business confidence is diminished and investment remains restrained. It makes no sense to invest heavily in an economy when growth is uncertain, and companies are holding back making big bets on the future.

Yet there is a silver lining in this: There is likely significant pent-up demand that can be unleashed once the virus fades. The sooner the population gets vaccinated, the faster spending and investment will rise. That could happen in the second half of the year.

The second positive is the stimulus bill that passed Congress in December. Although it is not all that is needed and additional funding will likely be required, it should keep many companies from going bankrupt and support more consumer spending.

Third, there is the broadening of the recovery. Yes, the economic rebound was largely artificial. Government stimulus monies funded much of the spending by households and hiring by businesses. But the housing market has boomed and manufacturing is coming back strongly. A base for future growth is forming.

What about the bad?

The biggest risk is the vaccine rollout and the potential unwillingness of large segments of the population to become vaccinated. The longer the process takes, the longer there will be restrictions and the greater the damage to household and business balance sheets.

There is the reality that the economy has to eventually stand on its own. The corporate and household welfare system that is in place must end at some point.

Unfortunately, there are thousands if not hundreds of thousands of zombie businesses that have survived simply because the government paid much their labor and operating expenses. When the stimulus ends, they will be at risk and many may go bankrupt.

We don’t know when this shakeout will commence, but it will likely begin this year. When it does, job growth could slow sharply, causing the unemployment rate to rise and income growth, confidence, consumer spending and economic activity to fade.

Similarly, much of the household spending rebound we saw in the summer and fall was funded by enhanced unemployment payments and extended benefits. When they disappear, personal income could fall, taking consumption with it.

Next, there is the issue of changing locational preferences of both households and businesses. Density is now out. We may not see the effects of the new trend until the economy reopens fully and the stimulus programs end, but it is coming.

If work-from-home is sustained on a significant basis, the impact on economic activity could be huge. Businesses in high-density locations that depend upon traffic from large number of workers could fail at an alarming rate. The demand for office space in central locations could drop, reducing rents and commercial real estate values. Suppliers of goods and services to offices and buildings would see a decline in demand.

Similarly, if the recentralization of population slows or is reversed, high-density housing demand would fall. Those firms that depend upon local residents, such as restaurants and retailers, would see their demand drop.

The whole economic structure of central cities could be put under stress. The shakeout would be messy as the changes would be abrupt, allowing little time for the business sector to adjust.

And finally, there is the ugly.

The political environment is about as dysfunctional as we have ever seen. Pure political advantage, not economics, is driving many, if not most, decisions.

The stimulus packages are a clear example of that. Although most economists believed further stimulus was needed, the December plan will support growth only into the spring because politics prevented additional spending.

But even the extremely generous initial set of programs was crafted using political necessities, not economic realities. The CARES Act, the Paycheck Protection Program, and the extended and enhanced unemployment benefits programs had many good aspects, but way too many politically popular but economically inefficient ones.

What will we get from our dysfunctional, beleaguered Congress going forward? With Democrats taking control of the presidency and Congress, they should be able to push through some of President Biden’s agenda. By spring, additional funding that gets us through the year is likely.

What does this all mean? The expectation is that economic growth this year will be moderate. But it is also not clear which of the issues highlighted above will dominate, so don’t bet the ranch on that.