U.S President Joe Biden’s $1.9 trillion economic stimulus package made economists mark up their growth forecasts for not just 2021 but 2022 as well.
According to Goldman Sachs, the United States economy will recover sharply from the COVID-19 pandemic, registering China-like GDP growth of 7% this year. Significantly, that would be the fastest pace for America since 1984 under Ronald Reagan.
Over the weekend, Goldman Sachs, citing the larger-than-anticipated American Rescue Plan, also increased its 2022 growth forecast to 5.1%. That is up from the bank’s earlier prediction of 4.5% and well over the consensus of 3.8%.
In that case, if that view turns out accurate, it will translate to stronger job prospects for U.S. residents. Goldman Sachs improved its labor market outlook. They predict that the jobless rate will fall from 6.2% to just 4% by the end of 2021. The unemployment rate is likely to keep tumbling. Analysts expect it to match the 50-year low of 3.5% by the end of the following year.
The American Rescue Plan includes $1,400 stimulus checks
Remarkably, the upbeat forecasts underscore the profound impact of the massive wave of stimulus supported by Congress and the White House. The most remarkable part of what emerged from Washington is that Joe Biden got almost everything he desired. An impressive feat considering the narrow majorities he holds in the Senate and House of Representatives.
According to Goldman Sachs economists, the final bill was closer to the original Biden proposal than they were expecting.
Furthermore, the Wall Street bank previously estimated Congress would enact a smaller stimulus package equaling approximately $1.5 trillion. Notably, before Democrats swept the Georgia Senate races, Goldman Sachs was modeling for just $750 billion in fiscal stimulus.
The U.S. Rescue Plan includes $1,400 stimulus checks, enhanced jobless benefits, $350 billion in state and local aid, and larger child tax credits. Moreover, it has to be mentioned that Joe Biden’s efforts to include a $15 federal minimum wage were unsuccessful.