Interview, Other
Markets Update: 2021 Global Growth Outlook
- The virus is expected to become significantly less problematic by spring, with herd immunity projected to be achieved in the second quarter to reduce large-scale outbreak risks.
- U.S. GDP growth for 2021 is forecast at 6.4%, exceeding the consensus by over two percentage points, while Europe is expected to see growth of 5% to 6% in 2021 and 2022.
- China's 2021 GDP growth is anticipated to be slightly below 8%, supported by sequential output increases occurring in 2020.
- A new COVID relief package of approximately $750 billion is expected to pass by early March, potentially including $300 billion in tax rebates ($2,000 per person), roughly $200 billion for state and local aid, and extended unemployment insurance of $300 weekly through mid-year.
- Longer-term fiscal components regarding healthcare, education, infrastructure, and climate are expected to be passed by the middle of the year or third quarter, potentially funded by corporate tax rates set at 25% rather than 28%.
- Tapering of the Federal Reserve's $120 billion monthly asset purchases may begin late this year but is more likely to occur in 2022, with the first rate hike not expected until the second half of 2024 or 2025.
- The Federal Reserve aims to see full employment, 2% annual inflation, and confidence in a moderate overshoot of 2% before hiking rates, while European rate hikes are not expected until 2025.
- Labor market inflation dynamics are described as flat, suggesting strong growth will not immediately cause significant inflation, while remote work shifts have driven impressive productivity increases.