Midyear is approaching, stimulus money is flowing, and the share of the US population receiving virus vaccinations is soaring.1 Finally, the US economy is showing some blue sky. On April 29, the Bureau of Economic Analysis’s first estimate for Q1 2021 GDP growth came in with an exceptionally strong annual growth rate of 6.4 percent.2 This followed Q4 2020’s 4.3 percent annual growth and the explosive Q3 2020 bounce of 33.4 percent.3 Though 6.4 percent growth is strong, it would have taken 10.0 percent growth to close the gap between the current GDP level and the prepandemic, Q4 2019 level.4 But America is getting there. A few days before the GDP growth announcement, the Conference Board’s April consumer confidence index, after gaining across the previous four months, hit 121.7. (A reading above 100 indicates growth.) There was still a way to go to hit the prepandemic, February 2020 132.6.5 But it felt good.

As table 1 shows, upward revisions of GDP growth forecasts are the order of the day. I note that the Wall Street Journal and Wells Fargo forecasts are the most recent, having been made in April and May, respectively, whereas the Congressional Budget Office and Philadelphia Fed forecasts were made in February. The International Monetary Fund, in its April World Economic Outlook, calls for 6.0 percent growth for the world economy, up from its 5.5 percent January forecast.6 Powerful annual numbers like these haven’t appeared since 1983, when the real GDP growth tally was 7.9 percent.7 After all the pandemic misery, has America somehow entered an exceptional high-growth era that will continue till mismanagement or misfortune brings an end to it? Is the strong GDP growth the result of massive stimulus spending and fear-reducing vaccinations? Or is something else going on? And given the return to far better times, does this mean America will pay for part of the prosperity with inflation?