IHS Markit recently released a statement from Joel Prakken, its chief U.S. economist, downwardly revising its 2021 U.S. GDP forecast as COVID-19 stimulus unlikely to be implemented this year. Prakken said in the release:
“IHS Markit expects GDP growth to fade after the third quarter, as catch-up spending wanes, federal and state & local fiscal support dissipates, and rising COVID-19 infection rates leave states cautious about re-opening their economies and encourage continued caution by consumers and business independent of official containment measures. We project GDP to surpass its previous peak in early 2022, and the economy to regain full employment in early 2024.
“With negotiations likely on hold until after the inauguration of President-elect Biden, we’ve removed previously assumed fiscal stimulus from the forecast pending clarification of the dimensions and timing of another pandemic relief bill. The removal of stimulus subtracted roughly 0.5 percentage point from our forecast of GDP growth in 2021, which is revised down from 3.7% to 3.1%.”