The Conference Board Economic Forecast for the US Economy

The Conference Board forecasts that US Real GDP growth will rise to 9.0 percent (annualized rate) in Q2 2021 and 6.6 percent (year-over-year) in 2021. Following solid economic growth in Q1 2021 we expect the recovery to continue through the remainder the year. Looking further ahead, we forecast economic growth of 3.8 percent (year-over-year) in 2022 and 2.5 percent (year-over-year) in 2023.

As the economy fully reopens and consumer confidence continues to rise, we expect consumer spending to help drive the recovery forward - especially spending on in-person services. These outlays will be underpinned by a strengthening labor market and a large pool of savings derived from three rounds of fiscal stimulus checks dispersed over the last year. Furthermore, the launch of a new wave of monthly government checks to families with children, worth more than $100 billion, is set to launch on July 15th. This program should further strengthen spending in the second half of the year.

The rapid acceleration in growth seen in early 2021 has led to rising prices and heightened concerns about inflation. Given recent data we are raising our inflation expectations. We forecast that inflation will peak in Q4 2021 with the price level for personal consumption expenditures (PCE) – the US Federal Reserve’s preferred inflation metric – rising to 4.1 percent (year-over-year) and Core PCE inflation rising to 3.6 percent (year-over-year). Inflation will likely remain elevated into early 2022, but then begin to moderate. It is unclear whether or not the Fed will tolerate these price increases for an extended period of time, and sooner than expected monetary tightening represents a growing downside risk to our forecast.

Finally, it looks increasingly likely that another large wave of government spending may be on the horizon – although the size, composition and timing remain uncertain. While a bipartisan infrastructure deal worth $1.2 trillion was struck in June it appears that Democrats may press forward on a larger reconciliation bill to supplement or possibly replace the negotiated package.  Given the uncertainty surrounding this issue, we do not currently factor it into our forecast. However, even if passed today, it is unlikely that the package would impact the US economy until 2022. 

THE CONFERENCE BOARD US ECONOMIC OUTLOOK, 2020-2021-2022-2023
Percentage Change, Seasonally Adjusted Annual Rates

*Actual data