President elect Joe Biden
Photographer: Mark Makela / Getty Images
Photographer: Mark Makela / Getty Images
Economists from Goldman Sachs Group Inc. have raised their growth forecasts for the US this year and beyond after President-elect Joe Biden unveiled a sweeping recovery plan calling for $ 1.9 trillion in spending.
In a weekend report to customers, economists led by Jan Hatzius predicted that the economy would grow by 6.6% this year, faster than the previously expected 6.4%. The unemployment rate for the end of 2021 is now 4.5%, down from the previous estimate of 4.8%.
The upgrade is fueled by the expectation that Biden, assisted by a democratically controlled Congress, will provide generous amounts of state tax aid, education and public health spending, as well as unemployment insurance, to offset the damage of a pandemic that is now in its most devastating state. to counteract. stage so far. Goldman’s estimate for economic growth in 2021 is the second highest in a Bloomberg poll of 84 economists; the median estimate is 4.1%.
While the economists don’t expect all parts of Biden’s proposal to pass, they predict that an additional $ 1,400 in individual stimulus payments will cause a “big spike” in disposable income in the first three months. On Thursday, Goldman raised his estimate to the amount of Biden’s stimulus will gain to $ 1.1 trillion, up from a previous forecast of $ 750 billion.
“We now forecast that nominal disposable income will grow by + 4.5% in 2021,” compared to the previous estimate of 3.8%, according to Goldman’s latest note.
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Goldman expects gross domestic product growth of 4.3% in 2022 and 1.6% the following year. “We have not made any changes to our Fed forecast and continue to expect the tapering to begin in 2022 and the launch in the second half of 2024,” the economists said, referring to their earlier prediction of when the Federal Reserve will raise interest rates.
Brian Deese, incoming director of Biden’s National Economic Council, warned on Sunday that the US economy is “moving downwards” and called for swift action.