Business Maverick: Goldman Lifts U.S. Forecast on Biden’s $1.9 Trillion Rescue Plan

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Goldman Sachs Group Inc. economists raised their growth forecasts for the U.S. this year and beyond after President-elect Joe Biden unveiled a sweeping revival plan calling for $1.9 trillion in spending.

In a weekend report to clients, economists led by Jan Hatzius predicted the economy would expand 6.6% this year, faster than the 6.4% previously expected. The unemployment rate for the end of 2021 is now seen at 4.5%, down from the prior estimate of 4.8%.

The upgrade is fueled by expectation that Biden, aided by a Democratic-controlled Congress, will deliver ample amounts of state fiscal aid, education and public health spending, as well as unemployment insurance benefits, to counter harm from a pandemic now in its most devastating stage to date. Goldman’s estimate for 2021 economic growth is the second highest in a Bloomberg survey 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 “large spike” in disposable income in the first three months. On Thursday, Goldman raised its estimate for the amount of“We now forecast nominal disposable income will grow in 2021 by +4.5%” versus the previous estimate of 3.8%, according to Goldman’s latest note.Goldman expects gross domestic product growth of 4.3% in 2022 and 1.

 

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