SIFMA’s biannual survey of U.S. economists highlighted some key economic trends, including a rising gross domestic product (GDP), lower unemployment, and inflation.
“As the economy recalibrates to a new post-pandemic equilibrium, we can expect to see at least temporary higher prices across multiple segments in inflation indexes, but the real question is whether inflationary pressures will prove temporary or underlying,” said Lindsey Piegza, chief economist at Stifel Financial and chair of SIFMA’s Economic Advisory Roundtable. “For the foreseeable future, this unknown will be the focus both for the market and policymakers.”
The chief U.S. economists from 27 global and regional financial institutions who took part in the survey expect real GDP growth to finish 2021 at 7.5 percent, followed by a 3.1 percent increase in 2022. On a quarterly basis, respondents forecast 10 percent real GDP growth in the second quarter, followed by 7.9 percent and 5.6 percent growth in the third and fourth quarters, respectively.
The economists said additional fiscal stimulus, faster opening of U.S. economy, and larger consumer spending could spike the numbers while lingering COVID restrictions and lockdowns, labor supply constraints, and higher inflation were downside risks.
Further, the economists expect unemployment to drop to 5.2 percent at the end of the year, down from its current 5.8 percent level. In 2022 they expect to see it drop to 4 percent.
As for inflation, the respondents expect the CPI (consumer price index) to end 2021 at 3.8 percent, while the core CPI will be at 2.9 percent. Those numbers are up from 1.2 percent and 1.6 percent, respectively, last year. However, the vast majority, 88 percent, believe current inflation pressures are temporary/transitory, while 81 percent are confident the Fed can achieve its 2 percent average inflation target in a sustainable way.
The survey was conducted between May 17 and June 3. All of the findings can be found on the SIFMA website.
SIFMA is the leading trade association for broker-dealers, investment banks, and asset managers operating in the U.S. and global capital markets