Recent economic data illustrates that conditions are improving, though serious risks remain. The primary driver of GDP over the next few quarters is likely to be the country's physical health, as the nation recovers from COVID-19. Elsewhere, the employment environment is in better shape than it was a year ago (though still far from strong) and consumer confidence is improving. We expect that rising confidence will lead to continued growth in consumer spending. Auto sales have recovered, and the housing market remains strong, even as interest rates tick higher. Businesses are again expanding. Our GDP model now calls for a 2.1% increase in absolute GDP in 2Q21 from 1Q21, which translates to an annualized gain of 8.9%, up from our prior forecast of 8.8%. We expect further improvement into 2H21. On an annual basis, we look for overall GDP growth of approximately 5.7% in 2021 and 3.7% in 2022. Our estimates are consistent with consensus forecasts and the outlook from the Federal Reserve, which call for growth of 4%-6% in 2021. The GDPNow forecast from the Federal Reserve Bank of Atlanta is 10.3% for 2Q21.
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