The US economy will grow at the fastest annual rate in decades this year and will surpass most of its most important counterparts, with the outlook suddenly improving, but another COVID-19 wave posed the biggest risk in the next three months. showed a Reuters poll.
There was a new wave of optimism among economic forecasters that predicted an increase in economic activity from the $ 1.9 trillion pandemic aid package already adopted and also from the infrastructure plan proposed by US President Joe Biden over 2 years. trillions of dollars, according to the April 16-20 survey 100 economists.
The world’s largest economy was forecast to grow by an average of 6.2% this year, the brightest outlook since polls began for more than two years and, if reached, would mark the highest. rapid annual expansion since 1984.
While the most recent projection of the 6.4% expansion of the International Monetary Fund was slightly more optimistic than the consensus of the survey, about 15% of 105 economists predicted that the economy will grow by 7% or more this year, the range of forecasts showing higher highs and higher lows compared to last month.
But nearly 70 percent of economists, or 39 out of 56, in response to an additional question, said the biggest risk to the economy was a recurrence of coronavirus cases in the next three months.
“We have raised our growth forecast due to additional fiscal stimulus and the rapid vaccination program,” said Sal Guatieri, a senior economist at BMO Capital Markets.
“The result is that the US economy is smoking. But another wave of cases would jeopardize our predictions. For now, we assume it will not lead to another round of aggressive restrictions.”
Reuters survey of US economic outlook: https://fingfx.thomsonreuters.com/gfx/polling/qmypmlxxdvr/EQ%20U.S.%20April.PNG
After expanding probably at an annualized rate of 5.8% in the previous quarter, the US economy was forecast to grow by 8.5% this quarter. This marks a sharp update – in stark contrast to forecasts for most major developed economies – from 7.2% forecast for this quarter last month.
While the US economy was forecast to return to pre-crisis levels this year, the unemployment rate was expected to last more than a year, according to a majority of economists in response to a separate question.
“As we will get later in the year, and certainly in 2022, the momentum not only from reopening but also from fiscal stimulus will fade until the stimulus turns into a fiscal obstacle,” he said. said Jim O’Sullivan, chief macro strategist. the TD Securities.
“So there are a lot of reasons not to simply extrapolate the strong numbers we see now, and we expect the net end result to be less than a full recovery in the labor market.”
While the Federal Reserve’s preferred inflation indicator – the base index of personal consumption expenditure (PCE) – was forecast to average 2.0% this year and next, more than 90% of nearly 50 economists they said the risks were distorted.
Reuters polls US growth, inflation and unemployment outlook chart: https://fingfx.thomsonreuters.com/gfx/polling/yxmpjdeeapr/US%20April%20dschart.PNG
Fed Chairman Jerome Powell acknowledged this year’s temporary inflation “slightly higher” this year, but said the central bank is committed to limiting any overspending.
Asked when the Federation will start reducing its monthly asset acquisition program, more than half, or 28 out of 52 economists, said in the first quarter of next year. Twelve said sometime this year and 12 said later.
“Fed officials attach political decisions to employment and inflation outcomes, which is normal, but confidence in achieving key goals depends largely on reopening and returning the economy to normal,” said Stephen Gallagher, chief economist. American General Society.
“After the middle of the year, they are more likely to talk about the discount, and the message should be strengthened. This guidance strategy should make it possible to reduce the reduction in asset acquisitions at the beginning of 2022. “
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