America is on the edge of its biggest economic boom since 1946

Felix Salmon
·2 min read

America’s financial titans are coming to a consensus: We are on the early edge of the biggest economic boom since World War II, with the promise of years of growth after the privation of the pandemic.

Why it matters: They might be wrong, but all point to the same data — this expansion will be kickstarted by trillions in spending from presidents Trump and Biden, the Fed's easy money, and piles of cash that consumers and companies accumulated during the COVID shutdown.

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This is likely to be a global phenomenon: Biden administration spending will have ripple effects around the world, and overseas bank accounts also have grown during COVID.

  • Governments' actions in response to the pandemic raised global GDP growth by a full six percentage points, estimates the IMF, adding that "the global growth contraction last year could have been three times worse than it was."

  • Still, total output shrank so much — by a stunning 3.3% in total — that there's now an unprecedented amount of slack in the global economy. In other words: The world has more potential upside than ever.

The biggest names in finance are making increasingly bullish predictions. JPMorgan CEO Jamie Dimon said Wednesday in his annual shareholder letter, closely watched on Wall Street: “This boom could easily run into 2023 because all the spending could extend well into 2023.”

  • Goldman Sachs last month raised its U.S. growth projection for this year to 8%, which would constitute the largest economic expansion in generations.

  • In India, the growth rate will reach a torrid 12.5% this year, per the IMF's latest projections, to be followed up with world-beating 6.9% growth in 2022.

The biggest risk to future growth remains the pandemic. The U.S. is still far from achieving herd immunity, and most of the rest of the world is further away still, with widespread vaccine access still a pipe dream for most poorer countries.

  • For the time being, vaccine optimism is strong. But future outbreaks, lockdowns, and variants all have the potential to derail economic recovery.

This story first appeared in a special Megatrends Edition of Axios AM.

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