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Without additional fiscal stimulus, the recent surge in COVID-19
infections and the re-imposition of measures to contain the virus
by some states and localities would undermine the economic recovery
early next year. However, the prospective inoculation by midyear of
much of the population with unexpectedly effective vaccines will
unleash consumer spending in late 2021 and early 2022.
With negotiations on fiscal stimulus now gaining bipartisan
support, we now expect agreement on a 3-month extension of
emergency unemployment programs, and an enhanced unemployment
benefit of $300/week, to be reached before Christmas. This stimulus
will more than offset the negative impact on spending of the recent
surge in infections and, alongside the promising news on vaccines,
led us to revise up our forecast for GDP growth in 2021 from 3.1%
to 4.3%.
Posted 07 December 2020 by Chris Varvares, Vice President and co-head of US Economics, IHS Markit and
Joel Prakken, Ph.D., Chief US Economist and co-head of US Economics, IHS Markit
