The U.S. economy is on track to grow at the fastest pace in nearly four decades this year thanks to unprecedented levels of government stimulus and increased vaccination rates, the Organization of Economic Cooperation and Development said Monday.
The Paris-based organization forecast that U.S. gross domestic product – the broadest measure of goods and services produced by a nation – would grow 6.9% in 2021, the biggest increase since 1984. By comparison, GDP contracted at a 3.5% annualized rate in 2020, when the economy came to a near standstill to slow the spread of COVID-19, which has infected more than 33 million Americans and killed over 594,000.
The new projections mark a more optimistic outlook from earlier this year: In March, the OECD predicted the U.S. would grow by 6.5%, an increase from its December forecast of 3.5%.
That uptick represents the faster-than-expected distribution of the vaccine – at least 50% of the population has received one dose so far – and the $1.9 trillion relief plan passed by Democrats in March. That measure, known as the American Rescue Plan, sent a $1,400 stimulus check to most adults, expanded unemployment benefits by $300 a week and allocated $350 billion to state and local governments.
"Substantial additional fiscal stimulus and a rapid vaccination campaign have given a boost to the economic recovery," the OECD said in the report.
The group, which represents 38 countries, also predicted the global economy would grow 5.8% in 2021. But it warned the recovery would be uneven; in many OECD nations, living standards are expected to remain well below pre-crisis levels, even by the end of 2022.
"It is very disturbing that not enough vaccines are reaching emerging and low-income economies," Laurence Boone, chief OECD economist, said in a statement. "This is exposing these economies to a fundamental threat because they have less policy capacity to support activity than advanced economies."
The possibility of a renewed coronavirus threat could result in increases in "acute poverty" and the possibility of "sovereign funding issues," Boone said, if financial markets become concerned.
"More broadly, as long as the vast majority of the global population is not vaccinated, all of us remain vulnerable to the emergence of new variants," he wrote. "Confidence could be seriously eroded by further lockdowns, and a stop-and-go of economic activities."