Fed Projects 6.5% US Economic Growth This Year... Could Surpass China for the First Time in 45 Years

China Proposes Over 6% Growth at NPC... Last Time US Growth Exceeded China Was 1976
Fed's Subtle Forecast Supports Stimulus by Projecting Lower Than Wall Street's 7-8%
"Actual Growth Likely Higher in China Than US"... Fitch Forecasts US 6.2%, China 8.4%

Jerome Powell, Fed Chair [Photo by AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] The U.S. central bank, the Federal Reserve (Fed), projected the U.S. economic growth rate at 6.5% this year, increasing the possibility that the U.S. economic growth rate could surpass China's for the first time in 45 years.

On the 17th (local time), after concluding the regular monetary policy meeting of the Federal Open Market Committee (FOMC), the Fed revised its economic growth forecast for this year upward from 4.2% to 6.5%. Based on this forecast alone, the U.S. economic growth rate could exceed China's this year. Earlier, the Chinese government officially set this year's economic growth rate at over 6% in the government work report at the plenary session of the National People's Congress (NPC).

According to World Bank statistics, the last time the U.S. achieved a higher economic growth rate than China was in 1976.

The 6.5% projected by the Fed is lower than Wall Street's expectations for U.S. economic growth.

Goldman Sachs, in a report on the 14th, projected the U.S. economic growth rate at 8% for this year. Previously, Goldman Sachs had anticipated a $750 billion stimulus package and expected the U.S. economic growth rate to be 6.4%. However, the actual stimulus package passed was $1.9 trillion, far exceeding expectations, leading to a significant upward revision of the U.S. economic growth forecast. The last time the U.S. economic growth rate exceeded 8% was in 1951. Goldman Sachs also forecasted that the U.S. unemployment rate would fall to 4% this year, then 3.5% in 2022, and 3.2% in 2023. Morgan Stanley's forecast for this year's U.S. economic growth rate is 7.3%.

The Fed's projection, which could be higher than China's but lower than Wall Street's expectations, appears to be a clever balance. It shows confidence in the economy by suggesting growth could surpass China’s, while also indicating that the economy is unlikely to overheat to the extent that Wall Street worries about tightening. Through this, the Fed has justified significantly raising its economic growth forecast while maintaining its stance on continuing economic stimulus measures. In fact, the Fed maintained its previous position that it will not raise the benchmark interest rate until 2023.

However, forecasts are just forecasts, and there are projections that China will still outperform the U.S. in economic growth this year.

In a global economic outlook report released on the same day, Fitch projected the U.S. economic growth rate at 6.2% and China's at 8.4% this year. Although Fitch significantly revised the U.S. growth forecast upward from 4.5% in December last year, it predicted that surpassing China would be difficult. The forecast for China's economic growth was also revised upward by 0.4 percentage points compared to December.

Fitch also raised its global economic growth forecast from 5.3% to 6.1% this year. It explained that the $1.9 trillion the U.S. government will spend on stimulus measures amounts to 2.5% of the world's total GDP and will be a major driving force for global economic growth.

This content was produced with the assistance of AI translation services.