Could The U.S. Economy Grow By 7% This Year?

On a special, blog-only edition of Market Week in Review, Senior Portfolio Manager Megan Roach discussed the latest developments pertaining to COVID-19 relief measures, including the American Rescue Plan and the European Central Bank (ECB)’s Pandemic Emergency Purchase Program. She also provided an update on U.S. inflation and equity-market performance.

Growth expectations rise as the U.S. passes pandemic relief bill

March 11 marked the one-year anniversary of the World Health Organization’s declaration of the COVID-19 outbreak as a global pandemic, Roach noted, adding that after a year of tremendous hardship and loss, there appears to be some light at the end of the tunnel.

“U.S. COVID-19 infections are continuing to decline from their January peak, with the country recording its first full week with fewer than 70,000 average daily cases since mid-October,” she stated. In addition, the nation’s vaccination efforts have stepped up considerably over the past month, with the U.S. now administering over 2 million doses a day on average, Roach said. The increase in COVID-19 vaccinations comes amid President Joe Biden’s March 11 announcement that all U.S. adults will be eligible to receive the vaccine by May 1, she added.

The president also recently signed into law the nation’s third fiscal stimulus package since the coronavirus crisis erupted: the $1.9 trillion American Rescue Plan. The legislation, which includes $1,400 stimulus checks, an extension of federal unemployment benefits and $350 billion in state and local government aid, is expected to supercharge the country’s economic recovery, Roach said. “U.S. real GDP growth could near 7% this year, which would make for the nation’s highest growth rate in a calendar year since 1984,” she remarked.

In a sign of the economic recovery taking hold, Roach noted that new numbers from the Transportation Security Administration show a recent uptick in air travel, with an average of more than 1 million passengers per day taking to the skies the first week of March. “This is the highest non-holiday total observed since the start of the pandemic,” she remarked. Roach added that the number of travel bookings 90 or more days into the future is also starting to accelerate, which she said is a sign of increasing confidence among Americans that they’ll be able to take vacations again soon.

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