Short term outlook for the United States economy, August 2021

Preliminary data from IHS Markit show that in August " Private sector expansion slows sharply amid capacity constraints and Delta variant spread".

The  Conference Board Leading Economic Index, published August 19, "...is consistent with strong economic growth in the second half of the year." The CB forecasts real GDP growth of 6% this year and 4% for 2022.

A panel of 36 forecasters surveyed by the Federal Reserve of Philadelphia "...expect real GDP to grow at an annual rate of 6.1 percent in 2021 and 4.4 percent in 2022." ( median forecast) 

A flash at the world economy

 PMI surveys, compiled by IHS Markit, show that world economic activity accelerated last April "...to reach an 11 year high...". 

The OECD monthly composite leading indicators "... point to a steady expansion in the OECD area and in most major economies..." in the coming months.

Uncertainties related to the evolution of the pandemy still taint any scenario about the short term economic outlook.

Short Term Outlook for the US Economy

 

The Chicago Fed National Activity Index and Markit Economics PMI data show that the US economy is expanding for the time being. This expansion should continue in the coming months, according to the Conference Board Leading Economic Index. The median projection for real GDP growth in 2021 is at 4.5%, according to the Philadelphia Fed on the basis of calculations made by 39 professional forecasters. 

The world economy expansion continued...

 ... in December, according to the most recent PMI data published January 6 by IHS Markit.

A look at the world economy

The world economy recovery was still going on in November but not as strongly as in October, according to PMI survey results published December 3 by IHS Markit. Sign of better days to come "Business optimism surges to highest since early-2014 on vaccine hopes".

In its Economic Outlook published in early December, the OECD forecasts that world GDP will grow by 4.2% in 2021 and 3.7% in 2022 after a decrease of 4.2% in 2020.

Canadian economy: the expansion phase will have to wait until the beginning of 2022

Canadian real GDP grew approximately by 10% in the third quarter, according to Statistics Canada's preliminary estimate published last October 30. That growth follows two quarters of contraction concentrated in March and April.

In its Monetary Policy Report, published October 28, the Bank of Canada mentionned that the progression of the economy from July to September reversed "... about two-thirds of the decline observed in the first half of the year..." (page 13). The Bank projects that the economic activity will grow by only 0.2% in the fourth quarter. Growth would be stronger in 2021 and 2022 to average close to 4% in both years. " This implies that GDP does not return to its pre-pandemic level until the start of 2022..." according to the Bank (page 18). This means that the economic phase of expansion would only begin at that time.

"A long and difficult ascent", according to the IMF

 The International Monetary Fund (IMF) published October 13 its most recent "World Economic Outlook". Gita Gopinath's blog gives a very good summary of its content.

Link to her blog.