The Economy Is Set to Take Off. Inflation Will Be a Major Problem.

In March, inflation was running at nearly an 8% annual rate. One month is not a trend, but January and February also saw high inflation.

Although there has recently been an increase in the number of COVID-19 cases, the administered vaccines should reach 70% of the population before summer begins. If that happens, the virus will be mostly contained so that economy of every state should fully reopen. That will lead to an economic boom, albeit an inflationary economic boom.

Sometime next week, the Commerce Department will report on GDP growth in the first quarter of 2021. That number will be at least 6% and could be as high as 8%. Since growth in the second, third, and fourth quarters will be greater, as the economy fully reopens, growth for all of 2021 will be at least 8%.

That will be the highest economic growth number in almost four decades. It means that GDP will be higher than it was before the pandemic, so the economy will have recovered very quickly from the steep, but short-lived recession seen last March and April.

By year-end, the unemployment rate, which is currently at 6%, will fall to under 5%, as millions of unemployed workers are called back.