Eric Thayer / Reuters
- Goldman Sachs raised its US GDP forecast to 6.6% based on Joe Biden’s $ 1.9 trillion stimulus plan.
- Bank economists now project a lower unemployment rate in the US of 4.5%, compared to 4.8%.
- Biden’s $ 1,400 stimulus checks will cause a “big increase” in disposable income, they said.
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Goldman Sachs has become even more optimistic about the outlook for the US economy this year under President-elect Joe Biden.
In a weekend note to customers, bank economists raised their forecast for US GDP from 6.4% to 6.6% in 2021. Goldman now expects a lower unemployment rate in the US of 4.5% at the end of 2021, compared to 4.8%.
The projected economic expansion will be fueled by an increase in disposable income and government spending, the bank said, as Biden’s $ 1.9 trillion stimulus plan underscores his intention to support the declining US economy.
“We do not expect all elements of the $ 1.9 trillion proposal to be approved, but we have increased our expectations for state tax aid, education and public health spending, unemployment insurance and several smaller items,” wrote Goldman economists.
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Goldman Sachs
Biden’s economic bailout package, which includes a $ 1,400 increase in stimulus checks, over a December measure of $ 600 per person, will cause a “big increase” in disposable income in the first quarter of 2021, said the bank.
“Now we predict that nominal disposable income will grow in 2021 + 4.5%”, compared to an earlier estimate of 3.8%, economists wrote.
After Democrats gained control of the Senate in the first week of this year, the bank raised its projection for the United States’ GDP to 6.4% due to the prospect of more fiscal stimulus to combat the consequences of the coronavirus. Goldman expects a 4.3% growth for the US economy in 2022 and a 1.6% growth in 2023.
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