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The Conference Board forecasts that US real GDP growth will rise
to 6.0 percent (year-over-year) in 2021, vs. our March forecast of 5.5
percent. This upgrade to our base case forecast scenario (black line) is due
to stronger than expected economic indicators in Q1 2021, the rapid
deployment of a $1.9 trillion fiscal support package, and a faster than
projected vaccination campaign.
Nevertheless, the immediate future remains uncertain with both downside and
upside risks at play. Our Downside Scenario (blue line) assumes that, among
other things, a vaccine-resistant COVID-19 mutation emerges later this year,
the vaccination campaign is prolonged, and the Federal Reserve signals that
it will begin to tighten earlier than expected. Under this pessimistic
scenario economic growth drops to just 4.7 percent this year. Alternatively,
our Upside Scenario assumptions include universal access to vaccines by the
end of Q2 2021, and the swift approval of the new Administration’s recently
announced $2.3 trillion infrastructure and taxation plan. Under this more
optimistic scenario economic growth could swell to 6.7 percent in 2021. At
present, we believe there is more upside risk to our base case forecast than
downside risk.
For additional details on The Conference Board’s US economic forecast and
recovery scenarios please visit our website.
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