'Flood gates are about to open': Bank of America just boosted its forecast for 2021 US GDP growth for these 3 reasons

• The US economy is set for "stellar" economic growth in 2021, Bank of America said in a note on Monday.
• The bank increased its 2021 US GDP growth estimate to 6.5% from 6.0% as it has become "more convinced" that the economy is set for a rebound after the COVID-19 pandemic.
• Detailed below are the three reasons why Bank of America just increased its 2021 US GDP growth forecast.
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The US economy will experience "stellar" growth in 2021 as the COVID-19 pandemic subsides, Bank of America said in a note on Monday.

The bank increased its 2021 US GDP growth estimate to 6.5% from 6.0% as it has become "more convinced" that the consumer will get out and spend this year, the note said. The bank also sees heightened economic growth extending into next year, bumping its 2022 GDP growth estimate to 5.0% from 4.5%.

Here are the three reasons guiding Bank of America's decision to increase its economic growth forecast, according to the note.

1. A larger fiscal stimulus package.

Congressional Democrats are pushing for a $1.9 trillion stimulus package that is scheduled to be voted on next month. But there is still work to be done on the bill, and some provisions proposed in the legislation will hit road blocks, BofA said.

"We now think that the bill will total $1.7 trillion, up from our prior assumption of $1 trillion. Not all provisions will hit the economy right away and we expect that $1.2 trillion of monies will hit this year with the rest spilling into next year and beyond," BofA said, adding that the "flood gates are about to open."

2. Better news on the virus front.

The recent news on the virus front has been "unambiguously positive," BofA said, pointing to virus cases being down 72% from the January peak, with hospitalizations following closely behind. This encouraging data should help tightly locked down states like New York and California ease restrictions.

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"Vaccinations are running at a faster-than-expected-rate, which should pull forward the timeline for successful reopening of the economy. This will help to unleash demand for leisure and other COVID-sensitive services even earlier than previously anticipated," BofA said.

3. Encouraging economic data.

Consumers quickly put their stimulus checks to work in December, with exceptionally robust retail sales data leading BofA to boost its first quarter GDP tracking estimate to 5.5%. A recovery in manufacturing has also materialized at a rapid pace as the housing market booms, evidenced by recent building permits data. "The goods side of the economy is still riding high while the services side is waiting with bated breath to participate. We expect the economy to accelerate further in the spring and really come to life in the summer," BofA said.

The biggest downside risk to BofA's estimates? If the virus curve steepens again, resulting in a fourth wave, according to the note, which added that it does not expect a rise in inflation will lead the Fed to hike interest rates too early.