Goldman Sachs is reportedly forecasting the U.S. economy will grow at an 8% rate this year, marking the largest economic expansion in seven decades, according to a note sent to clients Sunday and obtained by Axios.
“We have raised our GDP forecast to reflect the latest fiscal policy news and now expect 8% growth in 2021 (Q4/Q4) and an unemployment rate of 4% at end-2021 — the lowest among consensus forecasts,” economists at the investment bank said in the note, according to Axios.
NEW: Economists at Goldman Sachs have raised their GDP growth expectations for the U.S. economy to 8% for 2021 https://t.co/9AArVajsy3
— Axios (@axios) March 15, 2021
Economic growth of 8% with low inflation would be almost unprecedented. Gross domestic product (GDP) has not increased at that rate since 1951, when the U.S. began an economic “golden age” in the decade after World War II.
Goldman Sachs’ forecast, if true, would also mark a complete recovery from the economic downturn caused by the coronavirus pandemic. The economy shrank 4.1% last year amid mass closures and restrictions, according to the Bureau of Economic Analysis. (RELATED: Here’s Why Some States Might Not Need Another Round Of Coronavirus Relief)
An economic expansion of 8% this year would put the nation’s nominal GDP at roughly $22.6 trillion, according to Axios.
Goldman Sachs is notably more bullish on growth prospects this year compared to other Wall Street banks. The average prediction for annual GDP growth in 2021 is approximately 4.7%, according to financial data company FactSet.
The investment bank also said a spike in inflation was unlikely, according to Axios. Economists have expressed concerns about higher inflation as the federal government spends trillions of dollars to stabilize the economy and help households and businesses hit by the pandemic. (RELATED: Democrats’ Massive Stimulus Isn’t Likely To Wreck The Economy, Experts Say)
“But we expect inflation dynamics to mirror those last cycle, and therefore expect this forecast to translate to only 2.1% core [personal consumption expenditures] inflation in 2023,” the Goldman Sachs note stated, according to Axios.