Economists raised their growth prediction for 2021 U.S. gross domestic product in the January survey, saying vaccinations and the prospect of additional financial relief from Washington for individuals and businesses brightened economic prospects. The latest 2021 growth prediction, measured from the fourth quarter of the prior year, was a sharp increase from the 3.7% growth forecast for 2021 in last month’s survey.
Growth this year is expected to follow a contraction of 2.5% in 2020, when the pandemic hit, according to the survey. The Commerce Department will release fourth quarter and 2020 growth estimates on Jan. 28.
Economists in this month’s survey were nearly unanimous in their view that U.S. vaccination efforts will be positive for the economy. Around two-thirds of economists said Covid-19 vaccines will boost growth substantially this year, while just over a third expect vaccines will increase growth modestly.
“No vaccine, no recovery,” Joseph Brusuelas, chief economist at RSM US LLP, said. “The discovery of a vaccine will likely unleash over $1 trillion in excess savings that will satiate pent up demand.”