A Biden stimulus plan will spur US economic growth of 4.6% in 2021, Ned Davis Research says
- The US
economycould expand 4.6% in 2021 on the back of huge fiscal spending by President-elect Joe Biden's administration, according to a note from Ned Davis Research.
- The successful distribution of a COVID-19 vaccine will serve as a tailwind throughout 2021, but investors should prepare for a weak first half of growth followed by a strong second half, NDR said.
- Other tailwinds that will support a strong US economy in 2021 include an accommodative Fed, housing market strength, and a weaker US dollar, the note said.
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President-elect Joe Biden's multi-trillion dollar stimulus plan will spur a surge in economic growth next year, according to a Wednesday note from Ned Davis Research.
NDR estimates US real GDP will increase by 4.6% in 2021, in a recovery that will be marked by a slow start in the first half of next year, followed by a strong second half."We expect a significant boost from fresh fiscal spending and account for above-trend growth early in expansions," NDR said.
"Most of Biden's spending priorities have high output multipliers between 0.4 and 2.2, which means that every dollar of government spending generates between $0.40 and $2.20 of output," NDR explained.Read more: A 28-year-old hedge fund co-investing chief shares how he advanced from community college to Wall Street — and breaks down his two-pronged approach to managing the fund's volatility strategies
Other tailwinds for US economic growth will include continued strength in the housing market, stronger global growth, and a weakening US dollar, the note said.
But the economy isn't out of the woods yet, and still faces a number of headwinds, especially in the first half of 2021, NDR explained.Those headwinds include the continued spread of COVID-19, localized lockdowns, a slow recovery in the jobs market, a rise in evictions and bankruptcies, and cutbacks to state and local governments.
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