Inflation and other uncertainties could take shine off OECD’s strikingly optimistic prediction
Big stimulus programmes can produce big economic effects. That insight is hardly revelatory, but it was still striking to see the Organisation for Economic Co-operation and Development plug President Biden’s $1.9tn package of tax cuts and spending commitments into its models and produce wildly different growth forecasts – even from three months ago.
In the US, the OECD had been expecting growth of 3.2% this year, merely a solid rebound from 2020. Now, with a shove from the “American rescue plan”, it predicts 6.5%, which would be the strongest annual expansion in the US in decades.
