US economic recovery is likely to reaccelerate in early 2021.
Document Highlights
Following a surge in new COVID-19 cases at the end of 2020, the severity of the winter resurgence may be turning a corner. Coupled with the rollout of two vaccines, a $900 billion economic support package approved in late December and, potentially, an additional stimulus package proposed by the incoming US administration, there is reason to be optimistic about the economic recovery in 2021. Our baseline US forecast yields a 4.1 percent annual GDP growth rate in 2021 following an estimated 3.5 percent contraction in 2020. Quarterly growth should peak in 3Q21 at 6.1 percent (annualized) as the economy returns to prepandemic levels. However, we also offer upside and downside forecast scenarios due to uncertainty in the outlook. The upside scenario brings US economic output to prepandemic levels by 2Q21, while the downside scenario takes until 2022 to reach this level.
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