Economy Poised for Rapid Growth but Inflation Possible
New York, NY, April 12, 2021-Economists surveyed by The Wall Street Journal boosted their average forecast for 2021 economic growth to 6.4%, measured as the change in inflation-adjusted gross domestic product in Q4 from a year earlier.
“If realized, that would be one of the few times in 70 years that the economy has grown so fast.
“‘We had an incredible shock, but look how fast we’re bouncing back,’ said Allen Sinai, chief global economist and strategist at Decision Economics Inc. ‘We’re in the early stages of recovery, and we’ve got three to five years to go. I think we’re going to end up in a boom.’
“That boom might have a potentially troubling side effect. Inflation, as measured by the consumer-price index, is expected to jump sharply from 1.7% in February when March data is released Tuesday. That is partly a quirk of the data, as outright declines in consumer prices recorded at the start of the pandemic in March of last year drop from the 12-month calculation.
“Still, economists see further price pressures as the economy reopens, with inflation accelerating to 3% in June, which would be the highest since 2012, before slowing to 2.6% by December. They see the Federal Reserve starting to raise rates in mid-2023, rather than 2024 or later, as officials at the central bank have indicated.”