US Economic Survey, Mid-Year 2021

Key Takeaways

  • 2021 GDP growth est. 7.5%, vs. -2.4% in 2020 (median forecast, 4Q/4Q)
  • 2021 unemployment rate est. 5.2%, vs. 8.1% in 2020 (4Q average)
  • 2021 inflation estimate 2.9%, vs. 1.6% in 2020 (Core CPI, 4Q/4Q)

Setting the Scene

When we last did this survey, in December 2020, economists were focused on the economic recovery in terms of GDP returning to normal levels and the unemployment rate improving. Now that we are past the anniversary of the peak of the global pandemic – not to diminish the struggles many people are still undergoing – all eyes have turned to inflation.

The current uptrend is clear starting from February 2021, as the economy began preparing for a major reopening as vaccines were rolled out. In April, the inflation rate ticked even higher, on both headline and core measures. The April surge saw headline CPI jump to 4.2% and Core CPI (CPI minus food and energy) to 3.0%, from 1.4% in January of this year for both.

As the economy recalibrates its new post-pandemic equilibrium, we can expect to see at least temporary higher prices across multiple segments in inflation indexes. But the question for economists and market participants is whether inflation is transitory or underlying. The former would imply temporary price increases driven by COVID-related supply chain issues and a reopening-related increase in demand. The later would indicate a sustained upward movement in the overall level of prices.

Fed Chairman Powell has called the April surge in inflation “transitory.” And 88% of our Roundtable economists agree with the Fed Chairman’s assessment that inflation is transitory or temporary. Market metrics, however, will tell you not everyone is confidently in the transitory camp, as market prices (in terms of the S&P 500 index) continue to ebb and flow around inflation data releases.

Only time will tell if price increases driven by the factors described above will be sustained longer term, moving inflation from transitory to underlying. This unknown will keep economists and market participants focused on inflation data for the foreseeable future.

2H21 Survey Results Summary

With the first half of 2021 almost in the books – and the anniversary of the peak of the global pandemic behind us – economists continue to search for what will be the new “normal” post COVID. Some of the same questions remain, such as: have customer preferences permanently shifted; what portion of the jobs lost will become permanent? This year brought new questions as well, in particular around inflation and whether or not it will be transitory or underlying.

Therefore, we asked our Roundtable of economists to provide their best assessment of a new normal and when we can get there. We highlight the following from the survey:

Economic Forecasts
  • Unemployment rate forecasted to end 2021 at 5.2%, moving to 4.0% in 2022 (4Q average)
  • 2021 GDP growth expected at 7.5% (median forecast, 4Q/4Q); 2022 expected at 3.1%
  • 94% of economists expect the long-term potential GDP growth rate of over 2%, with 82% stating this is unchanged compared with pre COVID estimates
  • When building their forecasts, 65% assumed a vaccine would begin to be disseminated to the broad population by 1H21
  • The main factors impacting economic growth include: economic reopening post COVID, U.S. fiscal policy/budget, and US monetary policy
Inflation Forecasts
  • 2021 CPI – expectation 3.8% (2020 actual 1.2%)
  • 2021 Core CPI – expectation 2.9% (2020 actual 1.6%)
  • 88% of respondents believe current inflation pressures are transient/transitory
  • 38% of respondents expect a 15% to 25% probability the U.S. will experience structurally higher inflation over the long run, followed by 25% responding 25% to 50% and 0% to 15% each
  • Top factors to push inflation higher include: sustained breakdown of supply chains, sustained higher deficits and reversal of globalization
Life After COVID-19
  • 65% of respondents expect the labor force participation rate not to return to the ~63% pre-COVID average until beyond the end of 2022
  • In terms of stimulus checks and enhanced unemployment benefits impacting the ability for companies to hire staff, 94% of respondents indicate that it is one of several factors
  • 69% of respondents expect employees never to return to the office at pre-COVID levels
  • The key factors listed by respondents limiting a large-scale return to office include: lack of childcare/schools closed, employees choosing to continue working at home, and lingering health concerns of contracting COVID
  • Once a vaccine is distributed en masse, 44% of Roundtable economists expect consumers to approach high-density activities at increased but nowhere near pre-COVID levels while another 44% expect the activities to return to pre-COVID levels
  • When gauging long lasting or permanent negative impacts from changed behaviors on the heavily COVID-impacted activities, public transportation and airline travel came in at the top (71% of respondents for each)
  • 75% of respondents believe proof of vaccination should be required for airline travel and 63% for return to offices
  • Looking at COVID safety measures as a hurdle to returning to normal, 44% of respondents replied they view all requirements in aggregate as the biggest hurdle
  • 63% of respondents expect us to be required to continue wearing masks through 2H21, 38% responded 1H22
Fed Actions
  • Respondents indicated that should the Fed need to provide more policy accommodation, the top tool will be communication (100% of respondents), followed by asset purchases/balance sheet (75%)
  • As to the efficiency of the Fed’s communication with markets around its timeline for shifting monetary policy, 47% of respondents indicated it’s murky but decipherable, while 35% said excellent/very clear
  • 68% of Roundtable economists expect the Fed will begin to lift its target range for the federal funds rate in 2023, followed by 21% beyond 2023
  • The factors listed as most important to the Fed’s rate decision were: inflation pressure/expectations, COVID impact on labor conditions, and financial conditions
Fiscal Stimulus and Tax Policy
  • 35% of Roundtable economists estimate the total amount of additional stimulus in 2021 will be below $1 trillion and 35% indicated $1-2 trillion
    • 87% of respondents expect the American Jobs Plan to pass at a much lower price tag
    • 73% of respondents expect the American Families Plan to pass at a much lower price tag
    • 53% of respondents view the bigger risk to the economy is the government doing too much, therefore the economy overheats
    • When considering additional stimulus, 38% respondents indicated government should not be considering the debt level (debt/GDP currently over 100%), noting it needs to focus on stimulating the economy now
  • Expectations for tax rates to increase to
    • Corporations 25%
    • Individual (top bracket) 39.6%
    • Capital gains 23.8-43.4%
  • Looking at the potential negative impacts of raising taxes, respondents ranked reduced investment by corporations as the top concern with reduced long-term productivity growth and reduced corporate hiring tying for the second highest concern
Trade Policy
  • 29% of Roundtable economists expect the U.S. to renew suspensions on tariffs with the EU and expand the list of goods and 29% indicated it’s too early to tell
  • 57% of Roundtable economists expect the U.S. to address perceived unfair trade practices by China by only monitoring the situation, with 29% expecting the tariffs to be removed on some goods
  • When asked if the negative sentiments around China’s handling of COVID will have a lasting impact on trade relations with China, 57% responded yes
  • In light of this, 36% of respondents expect a meaningful shift to domestic production, thereby reducing U.S. reliance on overseas production

Full Report

Continue reading for all survey results, more charts and a reference guide on the U.S. economic landscape.


About This Report

The SIFMA Economic Advisory Roundtable brings together Chief U.S. Economists of 27 global and regional financial institutions. This semiannual survey compiles the median economic forecast of Roundtable members, published prior to the upcoming Federal Open Market Committee (FOMC) meeting. We analyze economists’ expectations for: GDP, unemployment, inflation, interest rates, etc. We also review expectations for policy moves at the upcoming FOMC meeting and discuss key macroeconomic topics and how these factors impact monetary policy.

Note: The survey was populated between May 17 and June 3.


SIFMA Economic Advisory Roundtable Chair

  • Lindsey Piegza, Ph.D, Stifel Financial Corp.

SIFMA Economic Advisory Roundtable

  • Ethan Harris, Bank of America-Merrill Lynch
  • Michael Gapen, Barclays Capital Inc.
  • Nathaniel Karp, BBVA Compass
  • Mickey Levy, Berenberg
  • Douglas Porter, BMO Financial Group
  • Andrew Hollenhorst, Citigroup
  • Nicholas Van Ness, Credit Agricole
  • James Sweeney, Credit Suisse AG
  • Michael Moran, Daiwa Capital Markets America, Inc.
  • Peter Hooper, Deutsche Bank Securities Inc.
  • Christopher Low, FTN Financial
  • Jan Hatzius, Goldman Sachs & Co.
  • Aneta Markowska, Jefferies & Co., Inc.
  • Michael Feroli, J.P. Morgan Chase & Co.
  • Mark Zandi, Moody’s Analytics, Inc.
  • Ellen Zentner, Morgan Stanley & Co., Inc.
  • Troy Ludtka, Natixis
  • Kevin Cummins, NatWest Markets Securities, Inc.
  • Lewis Alexander, Nomura Securities International, Inc.
  • Carl Tannenbaum, Northern Trust
  • Augustine Faucher, PNC Financial Group
  • Scott J. Brown, Raymond James & Associates, Inc.
  • Tom Porcelli, RBC Capital Markets, Inc.
  • Stephen Gallagher, Societe Generale Corporate and Investment Banking
  • Seth Carpenter, UBS Investment Bank
  • Jay Bryson, Wells Fargo Securities, LLC


  • Katie Kolchin, CFA, Director of Research
  • Justyna Podziemska
  • Ali Mostafa