US GDP could hit 7% this year: R. Clarida

Federal Reserve Vice Chairman Richard Clarida said US (European Union) economic growth could reach 7% this year as job supply bottlenecks are resolved and the recovery accelerates.

“It looks like the economy, if anything, could accelerate this year … We could have growth of more than 6%, maybe 7%,” Clarida said in her speech at a Fed conference in Atlanta.

He said that the current bottlenecks in employment and supply will likely disappear, and evidence suggests that “reopening the $ 20 trillion economy may take longer than it did to close it.”

The figure cited by the Vice Chairman of the Federal Reserve goes hand in hand with the figure announced by the President of the Federal Reserve Bank of New York, John Williams, who “expects the highest growth in the GDP of the United States in decades”.

For its part, the Bureau of Economic Analysis (BEA) announced a few weeks ago the US GDP record during the first quarter, which grew at an annual rate of 6.4%, after contracting by 3.5% during 2020.

It’s still early

In the same event, Richard Clarida indicated that the US jobs report was weaker than expected and showed that the economy had not yet reached the threshold to justify cutting massive bond purchases by the Fed.

“According to the April employment report, we haven’t made much progress (…) As the year progresses, policymakers will be assessing the data and we will definitely give a warning before anticipating a slowdown in these purchases.”

With regard to the issue of employment, it was recently announced that employers created 266,000 new jobs only during the past month, and it was expected to create one million jobs. Likewise, the unemployment rate was at 6.1%, up 0.1 percentage point from March.

BEA published inflation data last week, which recorded monthly growth of 0.8% in April, reaching an annual rate of 4.2%, the highest level since September 2008.

Experts cautioned that a highly expansionary monetary policy was fueling inflation, citing the latest record as evidence of this.

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