CBRE Econometric Advisors has published the Q2 2021 Macro-Outlook.
Key Takeaways:
•
We assume that COVID-19 will be manageable as the U.S. economy normalizes. Although COVID-19 cases will fluctuate the deployment of vaccines will limit the number of chronic cases that overwhelm the health system and materially impede economic activity.
• Presently, air travel and restaurant visitor volumes are back to pre-pandemic levels. U.S. consumers will remain aggressive in coming quarters and continue to shift spending from goods to services. This will push the U.S. economy from a ‘recovery’ to an ‘expansionary’ phase.
• Growth in labor-intensive sectors, such as leisure & hospitality, will drive 4.5% employment growth in 2021 and the labor market should exceed pre-pandemic levels by mid-2022. This outlook is predicated upon rising labor market participation, which should get a boost from children going back to school in the autumn and unemployment benefits being scaled back.
• Our outlook for inflation has shifted upwards as the combination of surging demand, supply bottlenecks, wage growth and index base effects have increased prices by >5% Y-o-Y. But
most of the factors driving CPI are transitory and inflation should fall back to the low-2% range by next year. Specifically, imbalances in the microchip space—a key input into many durable goods—are expected to even-out in coming quarters, putting downwards pressure on inflation.
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