U.S. Economic Outlook. Second quarter 2021

Summary

The economy could experience a period of bonanza not seen in decades. Strong recovery boosted by successful vaccination campaign, reopening of services, low interest rates, and massive fiscal stimulus. Flat Phillips curve and elevated slack limit inflationary pressures.

Key points

• Key points:
• Fed balance sheet tapering in 2022 and rate liftoff in 2023
• Moderate upward trend in long-term Treasury yields
• Infrastructure investment and tax policy will boost employment, capital spending, productivity and potential GDP
• Ample business opportunities and record-high bank profitability

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