A Strong Start to 2021 – March 3, 2021

The economy is off to a strong start in 2021. According to a closely followed GDP tracking model, GDP is tracking at a 10.0% annualized pace, per the Atlanta Federal Reserve (as of March 1).

The High Frequency GDP Model from Moody’s Analytics places growth at 9.0% as of February 26.

• Both models track data in real time. February’s unusually cold weather could temporarily dent economic growth.

Both are well above Moody’s survey of economists, which is forecasting 4.2% growth, and the Blue Chip Consensus, which is forecasting 3.0%.

Investor’s corner

It’s still early and tracking estimates could change as new data are received.

So far, however, economic growth has been much stronger than most economists had expected.

In today’s environment, forecasting has become exceedingly difficult.

Forecasting models have not fully adapted to today’s unusual conditions, and economists have done a poor job of incorporating fiscal stimulus and the reopening of large sectors of economy into their models.

However, surprises have generally been to the upside, which is encouraging.

Created 2021-03-03 16:25:28