With declining virus cases allowing states to begin easing restrictions on activity, we expect the accelerating vaccine rollout and continued fiscal support to help drive GDP growth up to an above-consensus 6.5% this year. President Joe Biden will struggle to push through his fiscal plans in entirety even with the Democrats controlling the Senate, but we are assuming that Congress will pass an additional $1trn of near-term stimulus, with $300bn of longer-term spending coming at a later date. A combination of a strong economic rebound, continued loose fiscal policy and the Fed’s new more flexible framework means the risks to inflation are increasingly skewed to the upside. But we do not expect the Fed to begin tapering its asset purchases until next year and think rate hikes remain several years away.
9 August, 2004
in US Economics › US Economics Weekly
Awful payrolls will not stop the Fed
