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We Look for 7.1% Growth in 4Q GDP

We anticipate a rebound in economic growth in 4Q21 and into 2022, despite the latest COVID-19 developments. Recent data illustrates that the economy is still expanding, though some white-hot growth rates in certain sectors are starting to cool. The primary driver of GDP over the next few quarters is likely to be the country's physical health, as the nation recovers from the COVID-19 pandemic. Trends here had been more positive prior to the onset of the Omicron variant, and cases may well start to rise sharply again. That said, the country is already taking steps to battle the new variant. Meanwhile, the pharmaceutical industry has developed vaccines and treatments. The domestic employment environment is in better shape than it was a year ago, and consumer confidence trends are starting to stabilize. Auto sales have recovered from pandemic lows but growth has slowed due to supply-chain issues that are starting to get better. Businesses are again expanding. But the housing market has started to cool as home prices soar. Rolling all the data up, and taking into account diminished inventories that will need to be replenished, our GDP model now calls for a 7.1% increase in GDP in 4Q21. On an annual basis, we look for GDP growth of approximately 5.5% in 2021 and 3.7% in 2022. Our estimates are consistent with consensus forecasts and the outlook from the Federal Reserve, which call for growth of 4%-6% in 2021. The GDPNow Forecast from the Federal Reserve Bank of Atlanta is 8.6% for 4Q21. ...  rise sharply again. That said, the country is already taking steps to battle the new variant. Meanwhile, the pharmaceutical industry has developed vaccines and treatments. The domestic employment environment is in better shape than it was a year ago, and consumer confidence trends are starting to stabilize. Auto sales have recovered from pandemic lows but growth has slowed due to supply-chain issues that are starting to get better. Businesses are again expanding. But the housing market has started to cool as home prices soar. Rolling all the data up, and taking into account diminished inventories that will need to be replenished, our GDP model now calls for a 7.1% increase in GDP in 4Q21. On an annual basis, we look for GDP growth of approximately 5.5% in 2021 and 3.7% in 2022. Our estimates are consistent with consensus forecasts and the outlook from the Federal Reserve, which call for growth of 4%-6% in 2021. The GDPNow Forecast from the Federal Reserve Bank of Atlanta is 8.6% for 4Q21.   more

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