New York Fed President John Williams sounded extremely optimistic about the US economic recovery from the coronavirus crisis, stating that it could post the fastest growth seen since the early 1980s this year. According to Williams, the US economy could experience a real growth of around 7% this year, terming it as “welcome progress after the toughest period for the economy in living memory.”

Williams shared these observations in a speech at a conference, adding, “While I am optimistic that the economy is now headed in the right direction, we still have a long way to go to achieve a robust and full economic recovery. In fact, with accommodative financial conditions, strong fiscal support and widespread vaccinations, I expect that the rate of economic growth this year will be the fastest that we’ve experienced since the early 1980s.”

He also played down concerns about a possible spike in inflation, driven by stimulus initiatives as the economy rebounds, taking a similar stance as Fed Chair Powell. Williams warned markets and analysts from reading too much into short-term data as the price volatility as the economy recovers from the effects of the pandemic could be temporary.

Williams expects inflation to return to the Fed’s target of around 2% by next year after short-term imbalances following the reopening of the economy and price reversals steady. While the various stimulus programs rolled out by the Fed and the government have played their part in driving a faster than expected economic recovery, the labor market needs to post a stronger recovery for the economy to return to pre-pandemic levels.