With the economy projected for the best growth since 1983, inflation is lurking

Ronald Reagan was in the White House, “Return of the Jedi” was in theaters, and economic growth reached a staggering 7.9%.

The United States has produced many more Star Wars movies since 1983, but growth has never approached that level – until this year, if economists are right. Those surveyed by The Wall Street Journal raised their average forecasts for economic growth in 2021 to 6.4%, measured as a change in inflation-adjusted gross domestic product in the fourth quarter from a year earlier. If it did, it would be one of the few times in the last 70 years that the economy has grown so fast.

“We had an incredible shock, but look how fast we’re coming back,” said Allen Sinai, chief global economist and strategist at Decision Economics Inc. “We are in the early stages of recovery and we are three until five years from now. I think we’re going to get into a boom. ”

Economists expect growth to slow to 3.2% next year, making 2021-22 the strongest two-year performance since 2005.

This boom could have a potentially disruptive side effect. Inflation, as measured by the consumer price index, is expected to rise sharply from 1.7% in February, when March data are released on Tuesday. This is partly a oddity of the data, as the direct declines in consumer prices recorded at the beginning of the pandemic in March last year fall from the 12-month calculation.

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