Deutsche Bank Economists Predict US GDP To Rise 7.5 Percent In 2021

The 2021-22 forecast for the U.S. GDP was revised upward by Deutsche Bank economists on expectations that the proposed $1.9 trillion pandemic stimulus package will pass both Congressional chambers, Reuters reported on Wednesday (Feb. 24).

“They’ve revised their baseline expectations for the next fiscal plan up from nearly $1 trillion to $1.6-1.7 trillion, with their 2021 growth forecast upgraded by 1.2 percentage points to 7.5 percent (Q4/Q4) and their inflation numbers pushed a bit higher, too, with risks on the upside,” said Jim Reid, Deutsche Bank strategist, per Reuters. Deutsche Bank economists also anticipate that the Federal Reserve will soon start winding down its bond-buying program, Reid added.

Federal Reserve Chair Jerome Powell said on Tuesday (Feb. 23) that the U.S. economy could expand by as much as 6 percent this year, Axios reported. A growing number of economists are predicting that the 2021 U.S. economy will rebound quickly. Annual GDP growth could hit levels not seen since the 1980s, Powell said.

The House Budget Committee passed President Biden’s $1.9 trillion relief package on Monday (Feb. 22), and the legislation passed the Senate committee on Feb. 5. The Biden administration is hoping to swiftly ratify the plan and get payments into the hands of Americans. The package includes extending federal pandemic unemployment assistance. Households have received two stimulus checks since the pandemic started: $1,200 in the spring of 2020 and $600 in early January. 

Biden said last week that he’s hopeful the country will see significant economic recovery by Christmas. The availability of vaccines should help the country achieve herd immunity, which is when 70 percent of the population have COVID-19 antibodies. Biden predicted that by February 2022, there will be far fewer masks and social distancing. 

The monthly Consumer Confidence Index on Tuesday (Feb. 23) hit a three-month high on news of a contraction in the number of new coronavirus cases and deaths and the continuing distribution of the vaccine. The number of respondents feeling positive about the labor market went up to 21.9 percent from 20.0 percent last month.