Goldman Sachs raises US GDP forecast to 6.6% in 2021 thanks to Biden’s $ 1.9 trillion stimulus package

• Goldman Sachs has raised its US GDP forecast to 6.6% on Joe Biden’s $ 1.9 trillion stimulus package.
• The bank’s economists are now forecasting a lower US unemployment rate of 4.5%, from 4.8%.
• Biden’s $ 1,400 stimulus checks will cause a “big jump” 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 the leadership of President-elect Joe Biden.

In a weekend note to customers, the bank’s economists raised their forecast for U.S. GDP to 6.6% in 2021, from 6.4%. Goldman now expects the US unemployment rate to be 4.5% lower by the end of 2021, from 4.8%.

The expected economic expansion will be fueled by increased disposable income and government spending, the bank said, as Biden’s $ 1.9 trillion stimulus package ramps up its intention to support the U.S. economic crisis.

“We don’t expect all elements of the $ 1.9 trillion proposal to pass, but we have raised our expectations for state tax assistance, education and health spending. public, unemployment insurance benefits and several small articles, “wrote Goldman economists.

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Biden’s economic bailout, which includes a $ 1,400 increase in stimulus checks, in addition to a December measure of $ 600 per person, will result in a “sharp rise” in disposable income in the first quarter of 2021, said the bank.

“We now expect nominal disposable income to increase in 2021 by + 4.5%,” from an earlier estimate of 3.8%, the economists wrote.

After Democrats took control of the Senate in the first week of this year, the bank raised its US GDP forecast to 6.4% due to the prospect of additional fiscal stimulus to combat the fallout of the coronavirus. Goldman expects the US economy to grow 4.3% in 2022 and 1.6% in 2023.

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