Wednesday, June 29, 2022
HomeWorldBiden faces more virus trouble. Wall Street economists see boomtimes for now.

Biden faces more virus trouble. Wall Street economists see boomtimes for now.

Republicans are portraying President Joe Biden’s Democrats as the party of “stagflation,” in a bid to recall the grim era of slow economic growth and skyrocketing prices that doomed Jimmy Carter’s presidency in 1980.

Trouble is, the “stag” part of stagflation hasn’t shown up. And it may not anytime soon.

Wall Street banks are busy jacking up their estimates for fourth-quarter economic growth to as much as 8 percent as pent-up demand following Covid lockdowns drives consumption and the economy steadily recovers more of the vast ground lost to the pandemic. Jobless claims are falling, employment growth is brisk and consumer demand remains hot. And while inflation is at a more than three-decade high, even prices at the fuel pump may ease as oil prices drop.

Morgan Stanley recently cranked up its growth estimate for the last three months of the year to an annualized rate of 8.7 percent from 3 percent because of strong consumer demand and declining jobless claims. Goldman Sachs sees growth of 6 percent and JPMorgan bumped its projection to 7 percent from 5 percent. The Federal Reserve Bank of Atlanta, whose model incorporates most real time economic data, forecasts a 9.7 percent jump.

“There is still a tremendous amount of momentum in this economy,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics who says fourth-quarter growth should be at least 6 percent.


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