Business economists forecast 8.5% GDP growth in second quarter of 2021; annual growth adjusted up to 6.5%

The National Association for Business Economics has turned more bullish in its growth estimates for 2021. From the press release:

“NABE panelists have grown more optimistic about the prospects for economic growth in 2021,” said NABE President Manuel Balmaseda, CBE, chief economist, CEMEX. “The median forecast calls for an 8.5% annualized growth rate in the second quarter of 2021 for inflation-adjusted gross domestic product, or real GDP. The panel has become significantly more bullish about 2021 as a whole. The median real GDP growth estimate for 2021 is 6.7%, compared to the 4.8% forecasted in the March 2021 survey.”

“NABE panelists expect near-term inflation pressure, but anticipate it being short-lived,” added Survey Chair Holly Wade, executive director, NFIB Research Center. “Inflation expectations moved up significantly from those in the March survey, but panelists anticipate inflation easing in the second half of 2021, with no resurgence in 2022.

“Over half—56%—of the respondents consider the balance of risks to economic growth in 2021 to be to the upside, while 15% expect the balance to be to the downside,” continued Wade. “Panelists point to a large fiscal stimulus program and infrastructure spending as the main upside risks.” 

The anticipated annual growth rate has correspondingly been updated.

On an annual-average basis, the panel expects real GDP to increase 6.5% in 2021, and then to taper off to 4.4% growth in 2022. 

The Associated Press reports,

A survey being released Monday by the National Association for Business Economics found that its panel expects the economy to expand 6.5% this year. That would be the sharpest such increase since 1984, when the nation was also emerging from a deep recession.

The NABE’s findings, based on the responses of 49 forecasters earlier this month, sketched a far brighter picture of the economy than its previous such survey, released in March, did. In that survey, the economists had collectively envisioned growth of just 4.8% this year.

While the optimism is welcome and justified by other identifiable trends, including still-high consumer confidence, finding qualified workers remains a challenge for many businesses. Eventually, labor shortages could slow growth. The Washington Post offers a look at how the search for qualified workers is spurring an acceleration in automation. This observation is instructive:

It’s not that automation is taking jobs from people; it’s allowing companies that can’t find enough workers to fill orders they otherwise would have to turn down.

“You don’t fire workers and hire a robot. That happens exactly no times,” said David Autor, an economics professor at the Massachusetts Institute of Technology.

Some evidence?

Indeed, one of the nation’s largest users of industrial robots, Amazon, announced recently that it planned to hire 75,000 new employees for its fulfillment and logistics centers at an average hourly starting wage of more than $17.

The company, which deploys more than 200,000 mobile robots throughout its warehouses, said it will pay signing bonuses of up to $1,000 in some sites. Since the end of 2019, Amazon has hired 500,000 new workers — more than the combined employment of Ford, Caterpillar, and Lockheed Martin. 

Overall, good news.