Hopes for blockbuster economic growth in the US have been tempered by the spread of the Covid-19 Delta variant, according to the University of California Los Angeles Anderson Forecast released today.
The Delta variant has led to consumer caution and supply constraints, according to the forecast. Still, the next few years should feature solid, but unspectacular growth. And the report predicts gradual gains in employment over the next several quarters instead of the monthly gain of more than 1 million jobs previously forecast.
Previous UCLA Anderson Forecast reports had pointed to a strong recovery as the Covid-19 vaccines became widely available and case rates went down. Vaccination rates have plateaued since the last forecast report in June and the Delta variant has quickly spread.
“What makes this growth ‘ho-hum’ is the comparison to what could have been if, globally, we had gotten Covid under control and had been able to transform pent-up demand, pent-up savings and a tremendous amount of government support into faster economic growth,” Leo Feler, UCLA Anderson senior economist, wrote in the forecast report released today.
Feler also noted the US economy remains down 5.3 million payroll jobs from its pre-Covid peak, and there’s little evidence to suggest the expiration of enhanced unemployment benefits will lead to a surge in job applications.
“The forecast is for more gradual gains in employment over the next several quarters,” he wrote. “We are no longer forecasting average monthly gains over 1 million. Going forward, we are forecasting average monthly gains of 330,000 in the near term, declining to 170,000 by the end of 2023.”
The UCLA Anderson Forecast estimate for average annual GDP growth for this year is 5.6%, down from the 7.1% predicted in the previous report in June.
For 2022, GDP growth is expected to be 4.1%, down from the previous projection of 5.0%.
However, the report raised predicted GDP growth for 2023 to 3.1% from the June prediction of 2.2%.