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Tuesday, January 19, 2021

A Positive Note from Merrill: "A light at the end of the COVID cave"

by Calculated Risk on 1/19/2021 08:56:00 AM

Here is a positive outlook on the 2021 economy.  

A few brief excerpts from a research note by Merrill Lynch Global Economist Ethan Harris: A light at the end of the COVID cave
Normally we write about COVID news in the back, but now it deserves front-page coverage; With COVID cases falling and vaccines accelerating, this is probably the beginning of the end of the COVID crisis. Here we argue:

• Renewed restrictions and the end to the holiday season seem to be bending the cases curve.

• The vaccine rollout should continue to accelerate as new resources and effort is put into the project.

• There is one major caveat: new more contagious strains have arrived in the US.
What does this mean for the economy? We continue to see upside risks to our above consensus forecast. We think the vulnerable population will be inoculated by March/April, cutting hospitalizations dramatically, and allowing a partial reopening. Michelle Meyer and team have already boosted their GDP forecast for 2021 from 4.6% to 5.0% based on a somewhat earlier and bigger stimulus package. Moreover, like most forecasters they have not incorporated the impact of a second package.