Goldman Sachs and UBS are Optimistic for 2021

Goldman Sachs and UBS have a pretty optimistic outlook for 2021, considering the uncertainties we are still facing.

Goldman Sachs’s economists project the US economy will grow 5.3% next year, stronger than the around 4% Wall Street consensus.

For 2022, the bank expects that the GDP will expand 3.8%, one percentage point above the consensus.

This chart below shows Euromonitor International Global Real GDP Growth Forecast 2014-2022

According to the bank, “if we are right that a safe and effective vaccine arrives before long, the economy should soon get back onto a strong recovery path.”

The news is not totally positive, though. “The pace of recovery is likely to get worse before it gets better,” Goldman Sachs wrote in the report.

The main obstacles pointed out the spike in new coronavirus cases in the US and its consequences on the economic recovery.

On Thursday, for the first time, the US reported more than 150,000 coronavirus cases, a record for a single day.

Goldman says the reacceleration of the economy should happen next spring, “as mass immunization fully reopens the high-contact consumer services that account for most of the remaining output gap.” 

The bank believes the US will have enough doses available to vaccinate its entire population in the first half of next year. 

Goldman also notes that consumer spending has already recovered to 98% of its pre-pandemic level.

The Swiss bank UBS changed its outlook after the good news about a vaccine against coronavirus — on Monday, Pfizer and BioNTech announced that their Covid-19 vaccine is 90% effective.

The bank was expecting coronavirus cases in the US to be near zero by the end of 2021, but after Pfizer’s announcement, the financial institution expects it to happen in the first half of the year.

“We might get a situation where reported cases of Covid in the United States fall very close to zero in Q2 (second quarter) of next year. That six-month difference, that two-quarter difference matters a lot, it means an extra 1 to 1.25 percentage point gain in GDP next year,” Seth Carpenter, chief US economist at UBS, told CNBC on Thursday.

It’s a very optimistic scenario. According to Dr. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases and a member of the White House coronavirus task force, Americans will probably return to everyday life only in late 2021 or early 2022.