Goldman Sachs boosts US GDP forecast to 6.8% in 2021 and now expects $1.5 trillion in COVID-19 stimulus

• Goldman Sachs raised its forecast for 2021 US gross-domestic-product growth to 6.8% from 6.6%.
• Economists now expect a coronavirus relief package worth $1.5 trillion, up from $1.1 trillion.
• The bank moved up its forecast for the Fed's first interest-rate hike to the first half of 2024.

Goldman Sachs upgraded its outlook for the US economy in 2021 on Tuesday and says it now expects a larger coronavirus relief package.

Economists at the bank raised their forecast for 2021 US gross-domestic-product growth to 6.8% from 6.6% and to 4.5% from 4.3% in 2022.

Last week, the Senate passed a budget resolution that paves the way for approval of President Joe Biden's proposed $1.9 trillion relief plan. The next step, expected to be completed this week, requires committees to draft and vote on legislation such as the details, size, and timing of particular provisions.

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Goldman Sachs doesn't expect the size of the bill to be finalized for another few weeks. But economists raised their COVID-19 relief-package estimate to $1.5 trillion, up from its previous estimate of $1.1 trillion.

The bank brought forward its forecast for the Federal Reserve's first interest-rate hike to the first half of 2024, from the second half of that year, on the basis of its upgraded GDP forecast, a larger-than-expected decline in the unemployment rate in January, and signs of a firmer inflation outlook.

"We expect the FOMC to start tapering its asset purchases in early 2022," the economists Alec Phillips, David Mericle, and Blake Taylor wrote.

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