U.S. Outlook to 2025

Updated: April 19, 2021

Vaccines and Government Stimulus Spur Growth.

The U.S. economy is set to expand this year on the heels of a 3.5 per cent decline in 2020. Next year, a solid gain is anticipated. One of the main factors driving the rebound is the massive $1.9-trillion stimulus package recently implemented by the Biden administration. The stimulus provides funds for individual families, state and local governments, health care, and the delivery of vaccinations, among other things. Also, the rollout of vaccinations, which is ahead of schedule, has allowed a gradual reopening of the economy and led to higher confidence and household spending. The solid growth should close the output gap (the difference between potential and actual real GDP) sometime in the second half of this year.

Contents of the Spring 2021 edition:

  • Consumer holds the key
  • What will consumers do with all their savings?
  • Mixed outlook for investment spending
  • Deficits as far as the eye can see
  • Labour markets improving but far from normal
  • Link between money supply growth and economy is changing


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Key findings

The U.S. economy will expand by 5.7 per cent this year and 4.8 per cent in 2022.

The rebound in economic activity is being driven by the faster-than-anticipated rollout of vaccines, massive fiscal stimulus, and ultra-accommodative monetary policy.

The fiscal deficit rose above $3 trillion in 2020 and will continue at these levels, led in part by President Biden’s $1.9-trillion stimulus package.

Employment won’t return to where it was in the early part of 2020. Many jobs that were lost in the service sector have been lost for good.

Previous release

Government support and vaccine rollout provide hope

Impact paper  |  32-min read
January 20, 2021