Speech

A Fireside Chat on Current Economic Conditions

Abstract: Vaccination rates have been better than expected in much of the U.S., and that’s led to a more rapid reopening of the economy than was forecast earlier this year. Forecasts of gross domestic product (GDP) have been significantly upgraded since the start of this year, with the median forecast of Federal Open Market Committee members at 7% growth for 2021. That is unusually high for a U.S. recovery. Despite the positive signs, we still have quite a way to go before we reach full employment, given the most recent unemployment rate was 5.8%, substantially above the 4.5% FOMC participants project by the end of 2021. One reason for that is a slower recovery in public-facing services, including tourism, hospitality, restaurants, and retail. Inflation is higher, but spikes in food and energy prices explain much of this, and those will moderate. Increased inflation can also be attributed to a variety of things that have happened over the last six months because of the unusual facets of coming out of a pandemic – including shortages in a variety of goods and services that we don’t normally experience during a recovery. Low rates and a high degree of stimulus have been appropriate, but it is important over time to watch for conditions that potentially raise financial stability issues.

Keywords: economic recovery; economic conditions; payroll employment; inflation rate;

Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Speech

Publication Date: 2021-06-23