Goldman Sachs predicts U.S. economy will grow 8% this year

[F-22Raptor]

Economists at Goldman Sachs raised their GDP growth expectations for the U.S. economy to 8% for 2021 in a note to clients on Sunday night.

Why it matters: If Goldman's forecast is correct, it would mark the largest economic expansion for the U.S. in generations.

• Not only would 8% annual growth denote a stupendous turnaround from the coronavirus pandemic, it would significantly outpace the firm's growth expectations for the U.S. from as recently as late 2020.

What they're saying: "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—that falls to 3.5% in 2022 and 3.2% in 2023," Goldman said in the note.

• "But we expect inflation dynamics to mirror those last cycle, and therefore expect this forecast to translate to only 2.1% core PCE inflation in 2023."

Between the lines: Goldman has been exceptionally bullish on the prospects for U.S. growth all year, far outpacing most other Wall Street banks' expectations.

• The average growth expectation among Wall Street analysts is 4.7%, according to FactSet, and was 3.9% as recently as November.
• Further, economic growth of 8% with inflation reaching just 2.1% would be almost unprecedented.

By the numbers: A growth of 8% this year would put U.S. GDP at around $22.6 trillion, marking a full recovery after the economy shrank 4.1% in 2020.

• U.S. GDP hasn't grown 8% in a year since 1951, when it totaled $356 billion.

Of note: Goldman's metric tracks fourth quarter over fourth quarter growth, rather than year over year.

https://www.axios.com/goldman-sachs...021-eb7e1d84-b6fa-483a-9e19-37a7faddadc0.html

 

[nang2]

Never believe such predictions. Those who make them never take any responsibility for them.

 

[Yongpeng Sun-Tastaufen]

8% is pretty slow growth. Should be at least 18%

 

[FuturePAF]

8% is probably likely, especially with the $300 a month for each child going to families, and people fed up with lockdowns getting vaccinated and going back to their lives.

But we will drop back to the paltry 1-2% if we don’t follow it up with an infrastructure plan. That will put a lot of people to work, and make the country more competitive.

The government needs to find a way to stimulate private sector growth, as they phase out the monthly payments to people, incentivizing people to get back to work, as the companies start to open positions when they begin to expand. We have to also beware of zombie companies living off loans. The zombie companies need to be allowed to fail, so new ones can take their place. And companies doing corporate buy backs need to be stopped so they spend on hiring and training workers.

that will help Main Street, it we might not see it boost Wall Street as much (GDP growth numbers). Which is why I doubt it will happen.

In summary, basically “we’re going back to where we were pre-COVID, except we added trillions to the national debt, but we’ll pay that back later so don’t worry about it.”

 

[Mirzali Khan]

Cuz everything is boutta open up in mid summer

 

[KurtisBrian]

8% is pretty slow growth. Should be at least 18%

or 100% "growth"

 

[FuturePAF]

Due to American innovation and the healthy demographics of the country, if the US can sustain itself through reinvestment in making itself more competitive, it will be able to defeat China in a generation or so; 2050-2060. Demographics have decimated Japan’s competitiveness and it looks to be what could do in China by 2050-2060. America can outcompete China, as it outcompeted (through all its ways) Japan and the Soviets in the 20th century, if it invests in making middle class life sustainable.

The $300 a month for each child in the US, is a great experiment in a way. Put money in the hands of families will immediately circulate in the economy (which multiplies the impact on the economy an approx. 6 fold when fully circulated; its called the “velocity of money”). The experiment is to see if cash infusions bring back towns. If the money doesn’t help then you know that town or region won’t really get the best ROI through infrastructure as another town.

Besides infrastructure, will have to be some level of consolidation (out of dying towns (where it is more expensive to provide services) and into more sustainable towns) and modernization of “Prospect cities”, and connecting them through frequent high speed commuter rail (as in the New York or Boston suburbs).

The key will be to make sure, the gap in services between rich towns and poor towns is nit too wide, otherwise private sector investment won’t come.

Prospect Cities; what China would call second or third tier cities.

Decaying Midwest towns

The current contrast between the middle of Long Island NY (where a lot of the ethnic minority middle class live) and the South Shore (where a lot of the upper middle class of NYC live). A video from this past weekend.

Hear what matters, direct from the mouths of People in a small town in Mingo County WV

 

[HttpError]

even after printing 1.8 Trillion $ of paper money still 8%?

 

[FairAndUnbiased]

In communist Soviet Russia, every year government reports 4%, 8%, 12%, 100% growth here, growth there, growth everywhere, even as more and more people wait in bread lines for cheap food, potholes can't even be fixed and small towns in the Russian heartland and Siberia decay due to lack of investment. Russian Neo Nazi movements arise where hope fades.

I am glad we don't live in totalitarian communist Soviet Russia.

 

[F-22Raptor]

In communist Soviet Russia, every year government reports 4%, 8%, 12%, 100% growth here, growth there, growth everywhere, even as more and more people wait in bread lines for cheap food, potholes can't even be fixed and small towns in the Russian heartland and Siberia decay due to lack of investment. Russian Neo Nazi movements arise where hope fades.

I am glad we don't live in totalitarian communist Soviet Russia.

US household net worth was $130.2 trillion at the end of Q4. The American people are literally richer than ever before.

 

[FuturePAF]

US household net worth was $130.2 trillion at the end of Q4. The American people are literally richer than ever before.

sure, but everything is vastly more expensive then it was a generation ago, such that the standard of living/quality of life is slipping. Also, I assume, for many Americans, a lot of the net worth is in housing, and not revenue generating assets.

more and more people are living like this woman. This is testimony from last year, not decades ago.

 

[Mk-313]

sure, but everything is vastly more expensive then it was a generation ago, such that the standard of living/quality of life is slipping.

more and more people are living like this woman.

inflation is a needed part fo the economy. without it innovation slows down. however if the wealth is rising in propotion then the economy is headed in the right direction. ill give this example

See the networth of american people a generation agoo. then plug that number in an inflation calcualtor to see what that number would be in todays dollar. if its 123 trillion then we made no progress. if its lower than 123 then we increased wealth.

 

[Mk-313]

8% is probably likely, especially with the $300 a month for each child going to families, and people fed up with lockdowns getting vaccinated and going back to their lives.

But we will drop back to the paltry 1-2% if we don’t follow it up with an infrastructure plan. That will put a lot of people to work, and make the country more competitive.

The government needs to find a way to stimulate private sector growth, as they phase out the monthly payments to people, incentivizing people to get back to work, as the companies start to open positions when they begin to expand. We have to also beware of zombie companies living off loans. The zombie companies need to be allowed to fail, so new ones can take their place. And companies doing corporate buy backs need to be stopped so they spend on hiring and training workers.

that will help Main Street, it we might not see it boost Wall Street as much (GDP growth numbers). Which is why I doubt it will happen.

In summary, basically “we’re going back to where we were pre-COVID, except we added trillions to the national debt, but we’ll pay that back later so don’t worry about it.”

Developed economies cap out at 3% max. with ideal at 1-2% anything above 3% is considered overheating. right now we do see 8% to partially account for reopening of Co-VID

2- America is free enterprise. govt doesnt step in unless things get out of hands

3- zombie companies dont live off loan. what they do is just make enough money to pay interest on their corporate bonds but not enough that the lender may receive more money to invest in other parts of the economy. there is no one definitive way to kill of a zombie company

4- wall street numbers are not GDP. GDP is the sum of transactions of government spending + household spending+ corporate spenfing . if companies stop buy backs and puts that money in the hands of the people that will actually increase GDP because those people will actually go out and spend it.
- where as corporate buy backs tend to keep money in the banks rather than flooding the economy

 

[FairAndUnbiased]

US household net worth was $130.2 trillion at the end of Q4. The American people are literally richer than ever before.

In communist Soviet Russia the Party elite also had more money than ever before.

Developed economies cap out at 3% max. with ideal at 1-2% anything above 3% is considered overheating. right now we do see 8% to partially account for reopening of Co-VID

2- America is free enterprise. govt doesnt step in unless things get out of hands

3- zombie companies dont live off loan. what they do is just make enough money to pay interest on their corporate bonds but not enough that the lender may receive more money to invest in other parts of the economy

4- wall street numbers are not GDP. GDP is the sum of transactions of government spending + household spending+ corporate spenfing . if companies stop buy backs and puts that money in the hands of the people that will actually increase GDP because those people will actually go out and spend it.
- where as corporate buy backs tend to keep money in the banks rather than flooding the economy

Wall street numbers are investment GDP.

 

[Mk-313]

In communist Soviet Russia the Party elite also had more money than ever before.


Wall street numbers are investment GDP.

current stock exchanges do not account for GDP. otherwise americas GDP would be higher than $50 trillion

"Other things not included in the GDP are government social security and welfare payments, current exchanges in stock and bonds, and changes in the values of financial assets"

EconPort - What is Counted in GDP?

www.econport.org