These Are Goldman Sachs’ Biggest Predictions for 2021

Ayushi Vanzara

17th Dec'20
These Are Goldman Sachs’ Biggest Predictions for 2021 | OpenGrowth

Goldman Sachs paints a rosy picture of 2021 for us. Goldman Sachs, an investment bank, in early November, published a 39-page report that delineated predictions about the US economy, monetary policies, Georgia Senate runoff and, the stock market.

Like for every prediction report, certain assumptions are kept in mind that backs the base for predictions. These assumptions, if not fulfilled, will adversely affect the results of these predictions. 

Goldman’s predictions are strongly based on the views: 

  • Coronavirus vaccine would be available by January with enough doses available to vaccinate the American population by the first half of the year.

  • The government will announce another stimulus package

  • Federal Reserve won't raise the rates 

There are several cautionary notes that one must read before reading the report. But, overall, Goldman Sachs has predicted an optimistic outcome and investors might want to take advantage of the trends anticipated.

 

Let's look at the Goldman Sach's Biggest Predictions for 2021

1. GDP will see a surge of 5.3%

The Federal Reserve's modest projection of the US's GDP is 4% whereas Goldman estimates that GDP will see a surge of 5.3% in 2021. That's a considerably high number compared to the Federal Reserve, pointing to several ramifications. High Growth or Rising GDP implies that:

  • American Corporates are doing phenomenal which in turn, should fuel the stock market

  • A  strong economy all around, indicating that Main Street would have extra money to spend.

Goldman expects a V-shaped recovery of the economy. This is terrific news as we are all trying to come out of the coronavirus recession.

Goldman Sachs has also published a similar Macro Outlook Report on India. To read the official India’s Macro Outlook 2021, click here

 

2. Unemployment will plunge to 5.3%

Just as GDP, Goldman also expects the unemployment rate to plunge to 5.3%. Goldman Sachs forecasts that as the economy recovers, the hiring will resume, decreasing the unemployment rate. However, this is contingent upon the stimulus package boost from the government. With the blue waves taking over the elections, it is expected that a fiscal stimulus package of $1trillion will be authorized, potentially before Biden’s inauguration on January 20.

 

3. Federal Reserve won't Raise Rates until 2025

The central bank of every country has a significant influence on the stock market. And so does the Federal Reserve. Everything Fed says manipulates the market to a tremendous extent as the money supply in the economy is affected by its decisions. 

Based on Fed’s announcement that it won't raise rates until inflation is consistently above 2%, Goldman expects that the Fed won't raise the rates until 2025.

Currently, the Funds rate set by the Fed is near zero and Goldman expects the Fed to keep it so until 2025.

These unusually low rates have assisted the economy to expand over the years and set records in stock markets just like it helped the recovery in 2020.

If this prediction comes true, it will have a huge impact, from the macro point of view, on the economy and the stock markets.

 

4. By the End of 2021, the stock market will spurt 19%

The bull market has been storming in 2020, with stocks making all-time new highs in November and December after huge selloffs in March. This has cautioned many analysts as the valuation of the market is getting too high.

Well, Goldman seems to be on the other side of the road as the firm expects S&P 500 to jump to 4300 by the end of 2021.

 

 

This forecast is partly based on Goldman's above prediction that the Fed won't raise rates until 2025.

To read the official redacted version of the Macro Outlook 2021 original report, click here

 

5. Additional 7% Rise in the Stock Market can be expected in 2022

Investors with massive gains in 2020 naturally have optimistic expectations for 2021. But, according to Goldman, the market trends of 2020 will not stop providing gains in that year. Rather, Goldman expects an additional rise of 7% in the S&P 500 by the end of 2022. 

If we go with the gains predicted by Goldman in 2021, the market participants should be looking forward to a total net gain of 24% over the next two years.

Generally, such long term forecasts have lower reliability. Although, with the Fed rates on hold for a foreseeable future and with the proposed economic stimulus by the Biden government, the rise of economic profits with low-interest rates is likely to remain unchanged in 2022 too as per Goldman Sachs.

 

6. Corporate Earnings to Grow 30% in 2021

With the exceptional gains prediction in the stock market, it's stupid to not see an increase in corporate profits. The primary factor of stock market gains is corporate profits without any doubt.

Despite the fact that the stock market has set new highs in 2020, revenue outbreaks will result in further gains in 2021 as per Goldman.

Goldman analysts expect the companies in the S&P 500 to report an EPS of $175 which would result in an enormous year-over-year gain of 30%.

Amidst the coronavirus epidemic, huge losses that corporations reported in 2020, such corporate earnings if reported, would be impressive and pave the path for Goldman’s stock market bullish predictions in 2021.

To point out specific industries, the Technology, consumer-discretionary, and materials sector would outperform as per Goldman.

 

7. FAAMG Continues to Prosper

FAAMG is an abbreviation coined by Goldman Sachs for Facebook, Amazon, Apple, Microsoft, Google stocks which are the top-performing stocks in the tech sector.

According to Goldman, “Fundamentals support higher valuation for FAAMG.” Goldman explains that such mega-cap tech companies offer longer duration which makes them favored in a low-interest rate territory for obvious reasons.

With that being said, and Fed keeping rates low till 2025, there's no reason why FAAMG stocks wouldn't continue to prosper. Goldman also states that “These companies have high near-term growth and low leverage, adding to their appeal.”

 

8. The Recovery Will Get Worse Before It Gets Better

After being in the dreamy world so far, Goldman Sachs also tints us with reality.

The firm predicts that things will get worse before it gets better since the financial support has largely dried up as of now. This has resulted in lower disposable income in the last months of the year.

Americans were expecting for a second $1,200 check to reach in the summer or fall in their mails. But as of December, no stimulus plan has been enacted. Lack of benefits from increased unemployment payments or any financial help at all has left them with lower incomes at their disposal that Goldman was referring to.

 

9. The Third Wave of Coronavirus is Expected to Worsen in Winter

Goldman feels that the major risk is the third wave of coronavirus which is expected to worsen in countries with colder temperatures.

This prognosis of Goldman Sachs is already blossoming with the huge rising in the coronavirus cases in early December across the country. This will not only delay the full recovery process of the economy but might result in a double-dip recession before things can get better in late 2021.

 

To summarise, fiscal stimulus packages and a vaccine is all we need to get out of this economic crisis. 

The vaccine will work as a lifeline for businesses to surge back to their normal, defreeze hiring, decrease unemployment, increase earnings. Whereas the stimulus package will work as an aid for businesses progression and consumers will have enough money to spend on more than just necessities, increasing corporate profits and overall contributing to a growing economy.

Altogether, these factors will result in a rising stock market and less unemployment as the Goldman Sachs Report anticipates.

 

Let us know your views in the comment section below.

 

To read more such articles, refer to the below-given articles:

Goldman Sachs CEO David Solomon says 90% of small businesses have exhausted PPP funds

In this article, David Solomon talks about how small businesses are struggling according to a survey conducted by them whereas markets are showing the big businesses recovery. To find out what are the key points of the survey, read more

Apple Is Building Its Own Version Of Google Search

We are all aware of the Google Search Engine but it would be an interesting feat to watch these two established superpowers fight to mark their space in the tech industry. Read more to find out the details.

High Growth Sectors of India

India’s economy is a growing economy. If you are an investor or a finance student, you must have an eye on the high-growth sectors of India. To find out, click here

Instructions to Endure Post-Pandemic Economy for Business

All businesses are fighting through this pandemic to survive and thrive. To make your endurance easier, read more

 

We, at OpenGrowth, are continually looking for trending startups in the ecosystem.  If you want to know any further information about the startup ecosystem or have any mind-boggling ideas, do refer to the other blogs at OpenGrowth. If you have any suggestions, do let us know in the comment section below.

Ayushi is currently pursuing Chartered Accountancy. No secrets there that she loves to read!  She believes words have the power of healing and is a medium that can convey like no other. She hopes to connect with people through her empathy, thoughtfulness, and by adding value to their lives.

Comments

Blank User| OpenGrowth

thecreditguy08@gmail.com

18th Jan'23 03:29:46 PM

Hi, first, I'm 66 and just learning; thanks to team XAP Credit Solution, all the benefits of using CC. I wish I'd know y'all when I was younger!!! Anyway, I am happy you’re able to boost my score from 490 to 790 in less than a few days without asking for an extra penny. All the collections, charge offs, eviction and lien were expunged from my report. I am able to get a very high limit of Amex credit cards and I also got qualified for a mortgage loan. This wouldn’t have been possible without XAP. I have an excellent report with great tradelines. You can contact XAP via: xapcreditsolution@gmail.com or +❶ (❽⓿❶) ❾❽❽ ❾❽❾⓿.

Blank User| OpenGrowth

browningsrussell@gmail.com

8th Jan'23 04:02:08 PM

It took 11 months but I was able to get my money back. Earlier this year I got entangled with a military doctor serving in Syria via a hookup site, we chit-chatted for weeks and she introduced me to cryptocurrency that she has earned massively. I was tempted to try it as I was going through some financial challenges after my chaotic divorce. I did invest $393,000.00 AUD dollars which I got from my divorce settlement. That's when I realized I have been swindled. Months later, I came across a testimonial, I never thought that after all these months I will be able to recover my lost Bitcoin from those scammers but ( Cybergenie@cyberservices.com )WhatsApp (+1) 252-512-0391). made that possible, here I am with a grateful heart to CYBER GENIE INTERCONTINENTAL…

Blank User| OpenGrowth

browningsrussell@gmail.com

8th Jan'23 04:00:31 PM

It took 11 months but I was able to get my money back. Earlier this year I got entangled with a military doctor serving in Syria via a hookup site, we chit-chatted for weeks and she introduced me to cryptocurrency that she has earned massively. I was tempted to try it as I was going through some financial challenges after my chaotic divorce. I did invest $393,000.00 AUD dollars which I got from my divorce settlement. That's when I realized I have been swindled. Months later, I came across a testimonial, I never thought that after all these months I will be able to recover my lost Bitcoin from those scammers but ( Cybergenie@cyberservices.com )WhatsApp (+1) 252-512-0391). made that possible, here I am with a grateful heart to CYBER GENIE INTERCONTINENTAL…

Blank User| OpenGrowth

tierramiller611@gmail.com

28th Dec'22 12:12:14 PM

I have always been skeptical about credit hackers; but my doubt was finally cleared when I came in contact with XAP Credit Solution through my uncle during his son’s funeral. I contacted them for fix and It took only 8days to get my credit report back to the path of excellent. Late payments have been marked as on time payment, hard inquiries, eviction and charge-offs are all cleared and my score is now 812 from low 500s. I’m recommending them to anyone in need of urgent and permanent credit fix. Contact XAP via: X A P C R E D I T S O L U T I O N @ G M A I L. C O M for your credit repair, Chex system and DUI fix.

Blank User| OpenGrowth

tierramiller611@gmail.com

28th Dec'22 12:10:55 PM

I have always been skeptical about credit hackers; but my doubt was finally cleared when I came in contact with XAP Credit Solution through my uncle during his son’s funeral. I contacted them for fix and It took only 8days to get my credit report back to the path of excellent. Late payments have been marked as on time payment, hard inquiries, eviction and charge-offs are all cleared and my score is now 812 from low 500s. I’m recommending them to anyone in need of urgent and permanent credit fix. Contact XAP via: X A P C R E D I T S O L U T I O N @ G M A I L. C O M for your credit repair, Chex system and DUI fix.

Blank User| OpenGrowth

tierramiller611@gmail.com

28th Dec'22 12:10:53 PM

I have always been skeptical about credit hackers; but my doubt was finally cleared when I came in contact with XAP Credit Solution through my uncle during his son’s funeral. I contacted them for fix and It took only 8days to get my credit report back to the path of excellent. Late payments have been marked as on time payment, hard inquiries, eviction and charge-offs are all cleared and my score is now 812 from low 500s. I’m recommending them to anyone in need of urgent and permanent credit fix. Contact XAP via: X A P C R E D I T S O L U T I O N @ G M A I L. C O M for your credit repair, Chex system and DUI fix.

Blank User| OpenGrowth

thomasgibson802@gmail.com

25th Nov'22 02:09:25 PM

I want to use this opportunity to tell the whole world on how I become rich and famous. I’m 93 years old. I was passing through difficulty in business and there was no hope of me coming out of my debt. I borrow money in my bank to do my business and I run at lost on the business I got frustrated and decided to be playing lottery to see if I can win and make my business grow and I have played for years now nothing good is coming my way on till I meet someone online talking about Dr Ayoola on the internet. He was taking about how this Dr Ayoola help him to win mega million lottery game. I said to myself if this is true and decide to contact him and told him to help me as well I later read more about this man and see how he has been helping people all over the world. I have faith in him and choose to work with him. After working with him he told me what I need to do for the number to be given to me which I did after he finish working he said I will have a dream and the number will be review to me in the dream. That night has I was sleeping I dream a number immediately he call me and gave me the same number I dream of and ask me to go and play the number. Today I’m here testifying of the good work he did for me I played the number and I won the sum of 1, 000,000 million dollars in a lotto max. You can contact Dr Ayoola for help if you want to win big in lottery game he has the gift of giving right number contact him today and thank me email him today Via email: drayoolasolutionhome@gmail. com or https://www.facebook.com/Dr-Ayoola-105640401516053/ text or call +14809032128

Blank User| OpenGrowth

adambarlam418@gmail.com

22nd Nov'22 06:37:24 AM

I am very impressed with Hack West and his team, some months ago I was frustrated with the steady dump of crypto and I decided to invest my crypto asset, little did I know I was making a gravy mistake. I invested my 4.9BTC and 105 Litecoin into a crypto telegram group that promised to be paying 35% of my total investment per month. Long story short, it was a shitty scam; I was always asked to deposit more before I can be able to withdraw my money. Thank God for Hackwest@ writeme .com who didn’t just recover all my money but also assisted to review their personal info and location. Hack West is very professional, timely, affordable and are affiliate agency to the FTC which approves their legitimacy. They have previously handled many successful cases. WhatsApp: +1 (424) 307-2628 This team offers other services Credit Repair Catch a suspected cheating spouse Rescue you from a blackmailer (extortionist) Phone cloning Website hacks Clearing of criminal records Boost credit scores, e.t.c I strongly recommend this great team!!!

Blank User| OpenGrowth

isabellalucas335@gmail.com

3rd Nov'22 08:34:57 AM

My ex-husband and I had always managed to stay friendly after our divorce in February 2017. But I always wanted to get back together with him, All it took was a visit to this spell casters website last December, because my dream was to start a new year with my husband, and live happily with him.. This spell caster requested a specific love spell for me and my husband, and I accepted it. And this powerful spell caster began to work his magic. And 48 hours after this spell caster worked for me, my husband called me back for us to be together again, and he was remorseful for all his wrong deeds. My spell is working because guess what: My “husband” is back and we are making preparations on how to go to court and withdraw our divorce papers ASAP. This is nothing short of a miracle. Thank you Dr Emu for your powerful spells. Words are not enough. Email emutemple@gmail.com Phone/WhatsApp +2347012841542.

Blank User| OpenGrowth

rinahsimiyu8@gmail.com

3rd Nov'22 01:30:25 AM

Hi everyone, here's my own experience with a private hacker/detective who i was referred by my co-worker after I told him sad experience with Crypto trading platform. I was referred to Dr Joel and trust me, my BTC was traced and a hunk part of it was successfully recovered for me totaled at $397.00, I didn't get all but at-least i didn't lose all also. Reach Dr Joel on (hackprointercontinental@gmail.com) OR WHATAPPS (+1-252-512-0391) if you have had any scam experience, I am sure he will be glad to assist you so don't lose hope.

Blank User| OpenGrowth

jojobautista010@gmail.com

17th Oct'22 09:04:48 AM

Get in touch with HACKWEST at WRITEME dot COM or Whatsapp: +1 424 307 2638 if you want to recover your scammed funds or get some legal counsel on how to go about it. They’re the best and most legit team out there. West helped to recover my lost Bitcoin of about $289k worth. I saw their reviews and reached out, got back all my funds with my return on investment. Superb I must say!

Blank User| OpenGrowth

jojobautista010@gmail.com

17th Oct'22 09:04:48 AM

Get in touch with HACKWEST at WRITEME dot COM or Whatsapp: +1 424 307 2638 if you want to recover your scammed funds or get some legal counsel on how to go about it. They’re the best and most legit team out there. West helped to recover my lost Bitcoin of about $289k worth. I saw their reviews and reached out, got back all my funds with my return on investment. Superb I must say!

Blank User| OpenGrowth

AONEFINANCIALTRADE@HOTMAIL.COM

20th Sep'22 03:08:54 AM

Hello Viewers We are aone investment platform, we have come here with premium packages for investors on crypto Future trading, crypto future trading has made life easier for new generation investors, you too can benefit and earn from this investment program,You can trade and earn with our signals.. we earning 700% profit for our investors weekly those who can"t take the trade market risk on their own, for example you invest $5k and in 7 days you get $35k profit this is 100% safe getting profit when due is guaranteed For more information on this kindly contact us: Whatsapp: +27633586789 Email: Aonefinancialtrade@hotmail.com

Blank User| OpenGrowth

Hawk Griffth

18th Jun'22 12:56:55 PM

Thanks a lot PINNACLE CREDIT SPECIALIST for the massive job for fixing my credit report without no traces. I was shocked with joy in my heart when he helped me repair my credit report which boost up my FICO score to 805 excellent and removed all the negative items, past eviction, hard inquiries, bankruptcy off my credit report within 8days. He eventually got my job done without charging outrageous fees. Don’t waste your time thinking about any credit specialist. Contact him now: pinnaclecreditspecialist@gmail.com phone +1 (585) 466 4373.

Special thanks to HACK VANISH, a professional hacker I’ve been hiring for the past 2 years because, I find him to be an outstanding hacker who has aided me in various hacking related issues, ranging from fixing my poor FICO credit score of about 437 TransUnion, 462 Equifax to 802 plus excellent score, tracking my cheating husband’s phone and currently has helped me recover my lost crypto funds from an online scam investment I recently ventured into, I must confess he is the best, quite brilliant, ever since I discovered him through a positive review I saw on Wallet Hub and reached out to him via Email: HACKVANISH @ GMAIL. COM, and Phone: +1(747) 293-8514, to which he responded in less than 10mins, I have never regretted working with him, he’s been quite helpful and highly efficient. I Would recommend his services to anyone without hesitation.

Blank User| OpenGrowth

Melissa levy

22nd Apr'22 05:43:12 PM

I lost my job few months back and there was no way to get income for my family, things was so tough and I couldn't get anything for my children, not until a met a recommendation on a page writing how Mr Bernie Wilfred helped a lady in getting a huge amount of profit every 6 working days on trading with his management on the cryptocurrency Market, to be honest I never believe it but I took the risk to take a loan of $1000. and I contacted him unbelievable and I was so happy I earn $12,500 in 6 working days, the most joy is that I can now take care of my family I don't know how to appreciate your good work Mr. Bernie Doran God will continue to bless you for being a life saver I have no way to appreciate you than to tell people about your good services.
For a perfect investment and good strategies contact Mr Bernie Doran via WhatsApp :+1(424)285-0682 or Telegram : @Bernie_doran_fx or Email : Bernie.doranfx01@gmail.com

Blank User| OpenGrowth

Nath Mary

2nd Apr'22 03:32:45 PM

I'm so happy to share this with you that can read / see this now. When I started trading binary and forex a few months ago, I really didn't have the necessary tools to trade and I lost a lot until I met Pablo Martinez who taught me all about market psychology as he managed my account for me. Today I am grateful to him for his great offer and help because it really changed my financial situation with an investment capital of $1500 and now I'm earning around $35,500 - $30,000 profits per week. Here is his WhatsApp no: +44 7520 636249 or his email address: pm7234029@gmail.com Https://www.facebook.com/PM-Fast-Trade-104912912155335/