Summary List Placement
Dwindling odds of a new stimulus deal are driving economists to tamper expectations for US economic growth. JPMorgan on Thursday became the latest Wall Street giant to follow suit. Michael Feroli, the bank's chief economist, lowered his gross-domestic-product estimates for the fourth quarter of 2020 and the first quarter of 2021. The US economy will expand by 2.5% in the final quarter of 2020, he wrote in a note, down from the firm's previous forecast of 3.5% growth. First-quarter growth will reach 2%, down from the prior 2.5% estimate. Household incomes will see the "most immediate impact" from the lack of additional fiscal aid, Feroli said. Another spending package would drive a 24% annualized increase in disposable income through a second round of relief checks and the resumption of expanded unemployment benefits, according to the bank. But the lack of a near-term bill would drive a 12% contraction in disposable income next quarter. Read more: Sunil Thakor's global stock fund has returned more than 500% to investors since 2009 by precisely targeting high-growth companies. He explains how he finds long-term winners in a 'sweet spot' that minimizes risk. An encouraging trend in households' saving activity kept JPMorgan from lowering its GDP estimates further, the note said. The personal savings rate fell to 18% in July after peaking at 34% in April, and the firm expects a reading of 15% for August. Should job growth continue its upward trajectory this month, Americans may shift some of their saving to spending and lift growth in the fourth quarter, Feroli said. The absence of a new stimulus bill has its upsides, the economist added. JPMorgan lowered its 2021 fiscal-deficit estimate to $2 trillion from $3.5 trillion, citing the lack of a deal. The forecast stands to change before the year is out, as the presidential election could change the outlook for federal spending plans. A "blue wave" would likely prompt greater spending, and even a divided government would likely lean toward larger deficits over slashed spending, Feroli said. Read more: Northwestern Mutual's chief strategist told us the 6 market drivers he's watching most closely amid the volatility — and broke down where he's putting his money over the next 9-12 months Congress has largely shelved plans for a new relief bill. Republicans have shifted their focus to filling the Supreme Court vacancy left by Justice Ruth Bader Ginsburg's death. Legislators on both sides of the aisle are also rushing to pass a spending measure to avoid a government shutdown. Still, some hope remains for stimulus progress ahead of the November election. Treasury Secretary Steven Mnuchin indicated on Thursday that new aid was "still needed" and told legislators he remained in talks with House Speaker Nancy Pelosi on passing a measure. Separately, House Democrats moved forward with a $2.4 trillion proposal that includes funds for American families, airlines, and restaurants. JPMorgan's updated forecast meets projections made by its Wall Street peers in recent weeks. Goldman Sachs economists on Wednesday cut their fourth-quarter estimate to 3% from 6%, similarly citing a lack of new stimulus before the end of the year. Bank of America lowered its estimate to 3% from 5% in early September after calling stalled relief negotiations a "speed bump" for the nation's economic recovery. Read more: Bruce Petersen spent 18 years in the retail industry before amassing a real estate portfolio with nearly 1000 units. Here's the investing strategy he's using that's 'head and shoulders better' than a traditional approach.Join the conversation about this story » NOW WATCH: Why it's okay to eat the brown part of an avocado
More like this (3)
President Joe Biden and Vice President Kamala Harris meet with Senate Majority Leader Chuck Schumer (D-NY)...President Joe Biden and Vice President Kamala Harris meet with Senate Majority Leader Chuck Schumer (D-NY) to discuss the $1.9 trillion stimulus bill. Stefani Reynolds-Pool/Getty Images Democrats in Congress are on the verge of passing the first big bill of President Joe Biden’s term: a $1.9 trillion Covid-19 relief...
Goldman Sachs boosts US GDP forecast to 6.8% in 2021 and now expects $1.5 trillion in COVID-19 stimulus
Summary List Placement Goldman Sachs raised its forecast for 2021 US gross-domestic-product growth to 6.8% from...Summary List Placement 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. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. Goldman Sachs...
Lawmakers in Congress are under fire from digital rights campaigners for embedding three controversial changes to...Lawmakers in Congress are under fire from digital rights campaigners for embedding three controversial changes to online copyright and trademark laws into the must-pass $2.3 trillion legislative package—which includes a $1.4 trillion omnibus spending bill and a $900 billion Covid-19 relief bill—that could receive fl...