IHS Markit Revises 2021 U.S. GDP Growth Forecast: A New Positive for Supply Chains

Economists now expect a “near certainty” of a $1.9 trillion fiscal stimulus to drive supply chains and create jobs.

According to Joel Prakken, chief U.S. economist and co-head US economics, IHS Markit, this comes against the backdrop of falling COVID-19 infection rates.

“There’s been some relaxation of containment measures, and an acceleration of the national inoculation campaign,” he adds. “This encouraged us to revise up our forecast of GDP growth for 2021 from 4.0% to 5.7%, and for 2022 from 3.9% to 4.1%.”

Chris Varvares, co-head US economics, IHS Markit, concurs, noting that he expects this growth to push GDP past its previous peak by the middle of this year and eliminate the output gap in 2022.

The previous peak of employment will be regained in early 2023, and the unemployment rate is expected to decline to 3.5% by late 2024,” he says.

“With such expansive fiscal policy providing for a quicker improvement in labor markets and an earlier rise in sustained inflation, we’ve revised our assumptions on monetary policy. We now expect the Fed to start raising the federal funds rate in mid-2024, more than two years earlier than previously assumed.”

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