The US economy is booming again
A flurry of positive economic data led JPMorgan and Morgan Stanley to boost their growth forecasts on Wednesday.
The Atlanta Fed’s growth tool has also improved, with growth in the fourth quarter being the strongest since the third quarter of 2020.
It is estimated that the US economy is booming with a boom in employment and Americans are spending large amounts of money for vacations.
The 2021 recovery is coming out with fanfare.
Economists were flooded with new data on Wednesday, mostly good news for the United States. Weekly filings for unemployment benefits fell Lowest level since 1969. Inflation rose higher, but Not as high as economists expected. Americans spent the whole month of October Stronger than expected.
Taken together, reports indicate that the recovery process is being enforced faster than expected. It was enough for Wall Street to raise its growth forecast for the last quarter of the year. Economists at Morgan Stanley boosted their estimate for growth in the current quarter to 8.7% from 3% on Wednesday, citing a “wealth of data” that showed new strength across the economy.
JPMorgan economists also raised their hopes for a recovery through the end of the year. The bank raised its estimate to 7% from 5% on Wednesday, similarly relying on Wednesday’s data dump in the upward turn. The team led by Michael Feroli said the narrowing of the US trade deficit – how much more a country imports than it exports – was a “noticeable” surprise and indicated that trade would not be a significant drag on GDP.
The bank added that other reports indicate that the supply crunch that affected the recovery and fueled high inflation is finally fading away.
“The overall improvement in the data may be the first outgrowth of the modest facilitation in supply chain issues evident in some of the survey data,” JPMorgan said.
It’s not just Wall Street calling for a stellar fourth quarter. The Atlanta Federal Reserve’s GDPNow tool, which uses data releases to adjust its estimate of growth for the current quarter, rose to 8.6% on Wednesday from 8.2%.
Everyone seems to think the recovery is starting to recover.
From stagnation in the third quarter to a rise in the fourth quarter
All forecasts are well above 2.1% growth. It was seen during the third quarter. The previous three-month period saw a delta-slow wave of hiring and disruption to economic activity. The rate of growth has been the slowest in the pandemic recovery, and the ongoing supply chain crisis has raised fears that the summer economic boom may officially end.
Wednesday’s data and banking reactions suggest a new boom started in October. Last month saw delta wave and retail sales fade away Rip to score heights. If the most optimistic forecasts come true, fourth-quarter growth will be the strongest since the third quarter of 2020, which itself represents the fastest growth since at least 1947.
An economic boom would also give Democrats a much-needed win in the economics department. President Joe Biden’s popularity took a hit as Americans blamed his administration for high prices and weak economic growth. Richard Curtin, chief economist at Consumer Surveys at the University of Michigan, said consumer sentiment fell to its lowest level in a decade in November due to “a combination of rapidly rising inflation coupled with the absence of federal policies that would effectively address the inflationary damage.” . And the extraordinary growth in the last quarter should give the party something to celebrate, especially with the midterm elections approaching.
To be sure, the biggest risks to recovery still loom. The supply chain crisis is showing signs of easing, but much more needs to be done to resolve the pervasive bottlenecks. Inflation will remain at high levels Until the second half of 2022Treasury Secretary Janet Yellen said in October. Management is taking action to bring down high gas prices, but major producers are overseas can counteract those efforts.
And even if these problems are resolved quickly, it will likely be too late to salvage the Democrats’ election hopes. Incumbent parties tend to lose control of Congress in their first midterm elections. over there There is almost no statistical relationship Between economic performance and midterm election results.
However, what may not be good enough for Democrats is still good for the country. The booming fourth quarter will help the United States leave the Delta wave entirely behind and bring the country closer to a full recovery.