Macro Outlook 2021: A V(accine)-Shaped Recovery
With the US election largely settled, Goldman Sachs Research has updated its global economic outlook. It is above consensus forecasts for growth in most major economies in 2021. At the most basic level, Goldman Sachs Research views the coronavirus recession as much more V-shaped than previous postwar cycles. Just as the global economy rebounded quickly (albeit partially) from the lockdowns in the spring, the expectation is for the current weakness to give way to much stronger growth when European lockdowns end and a vaccine becomes available. One important assumption underlying the forecast is that governments continue to do a reasonable job replacing private sector income lost in the disruption. In the United States, Goldman Sachs Research expects a $1 trillion stimulus package, potentially enacted before President-elect Joe Biden’s inauguration on January 20. While this is less than half of what might have been seen under a Democratic sweep in the election, it should suffice for a small positive fiscal impulse to US growth in coming quarters.