FAST FIVE: Goldman Lists The Three Things That Could Go "Really Wrong" In 2021
This unbridled optimism prompted Goldman to boost its full year US GDP forecast to 6.6%, nearly 50% higher than the 4.1% consensus.
The common theme: record euphoria has gripped not just markets – Wall Street is just as euphoric about the broader economy where “everyone is optimistic” and for a very simple reason: with the Biden admin set to (realistically) unleash at least $1 trillion in new stimulus (down from Biden's $1.9 trillion target), and also planning to unveil a new multi-trillion infrastructure program later in the year, negative numbers and bearish narratives simply do not matter ahead of this stimulus tsunami.
Surveys indicate that mass vaccination will significantly increase consumers' willingness to resume virus-sensitive activities, and the experience of other countries that have more effectively controlled the virus also shows that virus-sensitive services can quickly normalize once infections decline.
Richard Lessels (lead author of one study) characterized the results as showing that it was “possible” that that vaccine efficacy may be “slightly diminished.” At this point, it seems unlikely that vaccines will need to be adjusted to remain effective against either new strain, although the South African virus strain has more downside potential.
if it means that trillions more will be pumped into the economy – again, for political purposes, that the third risk, one of a “vaccine resistant virus strain”, is extremely likely to emerge some time around the summer, not only to extend the lockdowns into 2022 but to give Congress and the Fed political cover for more trillions in Universal Basic Income-funding stimmy checks (while politicians quietly embezzle trillions more).