US foresees best growth in 37 years: Business economists

25 May, 2021 12:00 AM printer

NEW YORK: The nation’s business economists have grown much more optimistic about the US economy this year, with a majority predicting that increased vaccinations, stronger job gains and further government aid will accelerate growth to its fastest pace in nearly four decades.

A survey being released Monday by the National Association for Business Economics found that its panel expects the economy to expand 6.5 per cent this year. That would be the sharpest such increase since 1984, when the nation was also emerging from a deep recession, report agencies.

The NABE’s findings, based on the responses of 49 forecasters earlier this month, sketched a far brighter picture of the economy than its previous such survey, released in March, did.

In that survey, the economists had collectively envisioned growth of just 4.8 per cent this year. The economy has been showing surprising strength and resilience in its recovery from the devastating pandemic recession, the worst since the Great Depression of the 1930s.

Significant government aid is widely credited as a key factor. Last year, Congress approved USD 4 trillion in support measures after the recession, which had cost tens of millions of jobs.

And in March, President Joe Biden pushed through USD 1.9 trillion in additional support this year, a package that included USD 1,400 payments to most individuals.

With viral cases dwindling, consumers increasing spending and more businesses reopening and hiring, economists have been upgrading their forecasts.

The NABE panel expects the economy, as measured by the gross domestic product, to grow at an 8.5 per cent annual rate in the current April-June quarter, up sharply from a 5.2 per cent forecast in March.

The government has estimated that the economy grew at a 6.4 per cent annual rate in the January-March quarter, a figure that it will likely revise up in a report to be released Thursday.

As the economic recovery strengthens, concerns have been growing about rising inflation pressures.

Last month, consumer prices surged by the largest amount in a decade. The NABE’s respondents expect inflation of 2.8 per cent this year and 2.3 per cent next year. Last year, inflation amounted to just 1.2 per cent.

But Holly Wade, chair of the NABE’s survey committee, noted that the forecasters believe that any acceleration in inflation will be short-lived.