Goldman Sachs is predicting the economy will grow at an 8 percent rate this year in a note sent to clients on Sunday, Axios reported.
Economists at the company informed clients that they were increasing their forecast for growth, which if it happened, would be the largest economic improvement in decades.
“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 forecaststhat falls to 3.5% in 2022 and 3.2% in 2023,” Goldman said in the distributed note obtained by Axios.
It also did not expect a spike in inflations, something that some economists have worried about as the government continues to spend money to prop up the economy and help households hit hard by the pandemic economy.
“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, the Goldman Sachs note stated.
Such a rise in growth would mark a complete comeback from the financial downturn caused by the coronavirus pandemic, surpassing the 4.1 percent decrease in the economy in 2020. With 8 percent growth, the U.S. gross domestic product (GDP) would reach about $22.6 trillion.
The 2.1 percent inflation on top of the expected growth would be almost unprecedented, according to Axios.
Goldman Sachs forecast is on the optimistic side compared to other Wall Street analysts, with the average growth prediction sitting at 4.7 percent, according to FactSet. Axios noted that Goldman Sachs examines fourth quarter over fourth quarter change instead of year over year.
The last time U.S. GDP hit 8 percent growth was in 1951.