Constance Hunter, chief economist at KPMG, outlined how the pandemic has created a K-shaped economy—with a strong bifurcation between different industries, geographies, and households—during a general session at REITwise 2021: Nareit’s Law, Accounting & Finance Conference.
Hunter was broadly positive on the outlook for the economy. She said the trajectory of U.S. GDP growth has been hampered by COVID-19 but should return to pre-COVID levels in the second quarter this year. She added that the U.S. is expected to return to trend growth GDP faster than any other country.
Growth in U.S. GDP is expected to be close to 6.5% in 2021, helped by a “very strong” spending impetus that is likely to carry over into 2022. In 2023, Hunter pointed to the possibility of “above potential” GDP growth, helped by fiscal and monetary policy tailwinds currently in place.
“I do think there is a strong possibility that we have a turbo-charged productivity growth period in the years to come and that the difficulty of the pandemic has forced us to be more efficient and productive and that that will have positive implications for the economy going forward,” Hunter said.
Among Hunter’s other observations:
· Cities that experienced a decline in rent during the pandemic could see an uptick in demand once more normal routines resume.
· Increased digital transformation should have tailwinds for economic growth for years to come.
· The U.S. will be the engine of global growth for the next several years.
· Any increase in services inflation is unlikely before the end of 2021.
· A sharp decline in labor force participation hints at a lid on wages.
· Governments are not going to let crypto become the dominant currency, although there are going to be fiat digital currencies issued by central banks within this decade. “It’s very unclear what the final chapter is going to be for crypto…I’m not so sure that in the long run crypto currencies are going to hold their values or even be full-fledged currencies.”
· Blockchain has the ability to improve record keeping and provenance information. “There’s massive applications for Blockchain.”
Watch video interviews from REITwise 2021: Nareit’s Law, Accounting & Finance Conference: