U.S. Outlook to 2025

Updated: August 5, 2021

Surging U.S. Economy Linked to Unprecedented Turnaround in Consumer Spending

The current U.S. economic recovery is different from any other rebound in recent history. It has been powered by billions of dollars in excess household savings, by firms anxious to take on workers, and by huge fiscal and monetary policy support. Last year, real GDP dropped as the pandemic led to numerous business and factory closures, which caused millions of workers to lose their jobs. In fact, the recovery in activity has been so strong that we expect real GDP to reach pre-pandemic levels in the first half of this year.

Contents of the Spring 2021 edition:

  • Aggregate demand
  • Red-hot housing markets
  • Deteriorating trade balance linked to rising purchases of imports
  • Rising inflation will not deter the Fed from running accommodative monetary policy
  • President Biden’s fiscal initiatives could boost economy’s prospects
  • Low-skilled workers in drivers’ seat


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Key findings

The rebound in economic activity is linked to surging consumer spending and solid gains in investment spending.

The savings rate won’t return to pre-pandemic levels until the end of the medium term as some baby boomers will use the extra funds provided by the federal government to replenish their savings damaged during the 2008–09 recession and financial crisis.

Rising investment in equipment and intellectual property could set the stage for a recovery in productivity growth, which has been dormant since the end of the 2008–09 recession.

Employment won’t return to levels attained in the early part of 2020 as some positions in the services sector will be lost for good.

Previous release

Vaccines and government stimulus spur growth: U.S. Outlook to 2025

Impact paper  |  20-min read
April 19, 2021