U.S. Economic Outlook, December 2021: There Arose Such A Clatter

Just one year ago, COVID-19 vaccines were not yet approved, gatherings were restricted amid surging cases, many schools and offices remained closed, and thoughts of moving past the pandemic seemed as realistic as visions of sugar plums. The transformation seen in 2021 has been historic, and the year is not ending quietly.

Inflation remains above target while economic data shows continued, robust growth. As a result, Fed officials surprised some observers with hints that they will normalize policy much more rapidly. We now expect a first interest rate increase from the Fed in mid-2022.

The year brought other challenges that our wondering eyes did not foresee, from new virus variants to persistent supply chain bottlenecks. Our economy’s ability to continue recovering despite those setbacks gives us confidence in another year of growth to come.

Key Economic Indicators