Last week Bank of America estimated that Americans have $3.5 trillion in their bank accounts they did not have one year ago. JP Morgan’s Jamie Dimon fueled investor optimism by saying that the American economy will stay strong through 2023.
Economists are now expecting the second quarter to grow by a whopping double-digit level, and even stronger than before the pandemic started. The overall 2021 growth rate is now projected at more than 6%. While lawmakers argue over whether it made sense to approve $1.9 trillion in fiscal spending, at least in the short run the stimulus encouraged analysts to reforecast even higher than earlier projections.
CNBC quoted the CEO of LaSalle Network, “This economy isn’t coming back. It is back. I tell you this is the most optimistic job market I’ve ever seen.” The American vaccine initiative is moving faster than anticipated, and has outpaced Europe and most parts of Asia despite continued skepticism by an alarmingly high percentage of Americans.
Jamie Dimon commented to shareholders, “I have little doubt with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom.”
Parts of America are open in full, and it looks unlikely the government would be able to impose new restrictions even if it wanted to, even while Europe and other parts of the world are still at a virtual standstill. While unemployment still looks high from historical standards, economists see a fierce drop to between 3% and 3.5% by 2022 if the country opens in full.
Federal Reserve Chair Jerome Powell also agrees with the optimistic sentiment, looking for stronger growth and hiring. Powell said, “We feel like we’re at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly.”
While Powell remains optimistic, it seems there is little chance that the Federal Reserve will raise interest rates in any substantial way before 2023. While the stock market has already had substantial gains, the real estate market may have the most to gain even as it has already heated up over the last year. In several major suburban areas, the real estate market has been stagnant for more than a decade in stark contrast to the stock market, but could be set for some strong momentum over the next several months.
A few analysts describe the future in a way that insinuates long term negative implications, by stating the next two years will be an “economy on steroids.”