The Conference Board Economic Forecast for the US Economy | The Conference Board
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US ECONOMIC OUTLOOK

The Conference Board Economic Forecast for the US Economy

JUNE 9, 2021

 The Conference Board forecasts that US Real GDP growth will rise to 9.0 percent (annualized rate) in Q2 2021 and 6.6 percent (year-over-year) in 2021. Following solid economic growth in Q1 2021 we expect the recovery to continue through the remainder the year. Looking further ahead, we forecast economic growth of 3.8 percent (year-over-year) in 2022 and 2.5 percent (year-over-year) in 2023.

As the economy fully reopens and consumer confidence continues to rise we expect consumer spending to help drive the recovery forward - especially spending on in-person services. These outlays will be underpinned by a strengthening labor market and a large pool of savings derived from three rounds of fiscal stimulus checks dispersed over the last year. Furthermore, the launch of a new wave of monthly government checks to families with children, worth more than $100 billion, is set to launch on July 15th. This program should further strengthen spending in the second half of the year.

The rapid acceleration in growth seen in early 2021 has led to rising prices and heightened concerns about inflation. Presently, we forecast that inflation will peak in Q2 2021 with the price level for personal consumption expenditures (PCE) – the US Federal Reserve’s preferred inflation metric – rising to 3.5 percent (year-over-year) and Core PCE inflation rising to 2.9 percent (year-over-year). Inflation will likely remain elevated for the remainder of 2021, but then begin to moderate. It is unclear whether or not the Fed will tolerate these price increases for an extended period of time, and sooner than expected monetary tightening represents a downside risk to our forecast.

Finally, it’s possible that another large wave of government spending is on the horizon. The White House is currently negotiating a $2 trillion infrastructure and tax plan with Senate Republicans, but a bipartisan compromise does not appear to be at hand. Alternatively, the Administration may be able to pass these programs without Republican support via a legislative mechanism known as reconciliation. This strategy would require all Democrats in the Senate to support the programs, however, which is not assured. Given the uncertainty surrounding this issue, we do not currently factor it into our forecast. However, even if passed today, these programs would not begin to impact the US economy until 2022.

 

THE CONFERENCE BOARD US ECONOMIC OUTLOOK, 2020-2021-2022-2023
Percentage Change, Seasonally Adjusted Annual Rates


 202020212020202120222023
 
I
Q*
II
Q*
III
Q*
 IV
Q*
I
Q*
II
Q
III
Q
 IV
Q
ANNUAL
ANNUAL
ANNUAL
ANNUAL
Real GDP -5.0 -31.4 33.4 4.3 6.4 9.0 7.8 4.2 -3.5 6.6 3.8 2.5
Real Disposable Income 2.6 48.5 -17.4 -7.6 61.7 -21.0 3.0 1.5 6.0 6.8    
Real Consumer Spending -6.9 -33.2 41.0 2.3 11.3 9.3 8.0 5.1 -3.9 8.1    
Residential Investment 19.0 -35.5 63.0 36.6 12.7 9.0 9.0 7.0 6.1 16.3    
Nonresidential investment -6.7 -27.2 22.9 13.1 10.8 9.7 7.4 6.2 -4.0 8.8    
Inventory Change (bln chn '12$) -80.9 -287.0 -3.7 62.1 -92.9 -35.0 50.0 40.0 -77.4 -9.5    
Total Gov't Spending 1.3 2.5 -4.8 -0.8 5.7 3.5 0.3 1.0 1.1 1.5    
Exports -9.5 -64.4 59.6 22.3 -2.9 8.1 3.0 4.1 -12.9 4.2    
Imports -15.0 -54.1 93.0 29.9 6.7 12.1 8.1 5.1 -9.3 13.9    
Unemployment Rate (%) 3.8 13.1 8.8 6.8 -21.0 5.8 5.2 4.6 8.1 5.4 3.9   
PCE Inflation (%Y/Y) 1.7 0.6 1.2 1.2 1.8 3.5 2.9 3.0 1.2 2.8 2.3 1.8
Core PCE Inflation (%Y/Y) 1.8 1.0 1.4 1.4 1.6 2.9 2.2 2.4 1.4 2.3 2.1 2.0

*Actual data


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