Wall Street Says U.S. Economy Is Booming Again

The 2021 recovery is going out with a bang. Economists were flooded with new data on Wednesday, most of it good news for the US.

Photo Insert: The news comes as an early Christmas gift for the pandemic-battered US economy.

Weekly filings for unemployment benefits slid to the lowest level since 1969. Inflation surged higher, but not as high as economists expected. Americans' spending throughout October was stronger than forecast, Ben Winck reported for BusinessInsider.

Taken together, the reports signal the recovery is charging forward faster than expected. It was enough for Wall Street to lift their forecasts for fourth-quarter growth.

Morgan Stanley economists boosted their estimate for current-quarter growth to 8.7% from 3% on Wednesday, citing "the wealth of data" that showed fresh strength throughout the economy.

Economists at JPMorgan also lifted their hopes for recovery through the end of the year. The bank raised its estimate to 7% from 5% on Wednesday, similarly basing the bullish shift on the Wednesday data dump.

The narrowing of the US trade deficit — how much more the country imports than it exports — was a "notable" surprise and suggests trade won't be a huge drag on GDP, the team led by Michael Feroli said.

Other reports suggest the supply crisis that's weighed on the recovery and fueled higher inflation is finally starting to fade, the bank added.

"The overall improvement in the data may be the first fruit of the modest easing in supply chain issues evident in some of the survey data," JPMorgan said.

It's not just Wall Street calling for a stellar fourth quarter. The Federal Reserve Bank of Atlanta's GDPNow tool, which uses data releases to adjust its estimate for current-quarter growth, rose to 8.6% on Wednesday from 8.2%. Everyone, it seems, thinks the recovery is bouncing back.

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