Democrat sweep to hasten US economic recovery: Goldman Sachs

Goldman Sachs economists are saying that if the Democrats gain unified control of Washington, it would prompt them to upgrade their forecasts.

While a Democrats sweep would likely result in higher taxes and regulation, Joe Biden's promise of government spending coupled with extremely low-interest rates is perceived by Goldman Sachs as likely to speed up the economy.

Goldman Sachs cited a fiscal stimulus package of at least $2 trillion shortly after Biden's inauguration on January 20 and longer-term spending plans on infrastructure, climate, health care, and education that "would at least match the likely longer-term tax increases on corporations and upper-income earnings."

Consequently, Goldman Sachs expects it to result in a substantially easier US fiscal policy, a firmer global growth outlook, and a reduced risk of renewed trade escalation.

Moody's economists, led by Mark Zandi, noted that the economic outlook is strongest if Biden and the Democrats sweep Congress and can fully implement their economic agenda.

Moody's Analytics found that Biden's economic proposals would create 7.4 million more jobs than would Trump's, allowing a return to full employment in the second half of 2022, almost two years earlier than under Trump's plan.

While a sweep by the Democrats would result in oil-and-gas companies, private prisons, student lenders, and some banks to underperform due to the risk of new regulation, most companies would benefit from increased spending on infrastructure, education and clean energy could outperform.