June 28, 2022

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US economy forecast to grow at its fastest in nearly 40 years

2 min read

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Via a Reuters survey of analysts (April 16-20 poll of over 100 economists):

The U.S. economy predicted to grow on average 6.2% this year

  • if so this would be the fastest annual expansion since 1984
  • about 15% of 105 economists predicted the economy would grow 7% or more

Nearly 70% of economists (39 of 56) in response to an additional question said the biggest risk to the economy was a resurgence in coronavirus cases over the next three months. 

Comments from BMO:

  • “We raised our growth forecast due to additional fiscal stimulus and the speedy vaccination program”
  • ” “The upshot is that the U.S. economy is smoking. But another wave of cases would put our forecast at risk. For now, we assume it won’t lead to another round of aggressive restrictions.” 

TD are wary of expecting such growth to continue next year:

  •  “As we will get later in the year and certainly in 2022, the boost from not just reopening but also fiscal stimulus will be fading to the point when the stimulus turns into a fiscal drag” 
  •  “So there are a lot of reasons to not simply extrapolate the strong numbers we are seeing now and we expect the net result at the end to be less than a complete recovery in the labor market.” 

The consensus view seems to be ‘transitory’ rapid growth (and inflation). The risk is this is not the case and the Fed begins to tighten sooner rather than later. 

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