Senate majority leader Mitch McConnell speaks at the Senate floor and addresses coronavirus stimulation, direct checks on American homes, Section 230 and electoral integrity.
The new aid from COVID-19 will provide a greater boost to the US economy than initially expected, according to Goldman Sachs.
The $ 900 billion aid package will help increase the US gross domestic product by 5% a year in the first quarter and by 5.8% next year, analysts said. Goldman previously expected a $ 700 billion package approved shortly after Inauguration Day to help GDP grow 3% in the first quarter and 5.3% in the next year.
“The biggest difference from our previous assumption is the inclusion of stimulus checks, which now imply a huge increase in disposable income” in the first quarter followed by a sequential decline in the second and third quarters, wrote a Goldman research team Sachs led by chief economist Jan Hatzius.
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The aid package includes a direct payment of $ 600 for most Americans, an additional $ 300 per week in unemployment benefits through March, small business payroll protection loans and other provisions.
A direct payment of $ 2,000, which is backed by President Trump and has already been approved by the House of Representatives, could soon be voted on in the Senate.
Goldman says the increase in payment would “significantly” increase disposable income in the first quarter to levels above the second quarter of this year, when the $ 1,200 stimulus checks were distributed. The company did not provide a forecast if the $ 2,000 payment was approved.
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Although Goldman’s forecast is well above the 2.5% Wall Street consensus, it would still represent a sharp slowdown from the current pace of growth.
The Federal Reserve Bank of Atlanta’s GDPNow model, which tracks real GDP based on economic data available for the current quarter, says the US economy is registering 10.4% growth for the last quarter of 2020. A model updated will be released on January 4.
This follows the record 33.4% growth experienced in the third quarter, after governments eased blockages in order to slow the spread of COVID-19. These blocks caused the economy to contract at a record 32.9% annualized rate during the period from April to June.