Thanks to the American Rescue Plan’s public investments, which put $1,400 direct checks into the pockets of millions of Americans, allowed for increased Covid vaccinations and testing, and kept essential workers on the job through state and local government aid, Goldman Sachs predicts an economic boom in the United States.

Editor Pen: Goldman Sachs predicts economic boom on US Covid recovery

Goldman Sachs has forecast an economic boom for the US as the country recovers from the Covid-19 pandemic.

In a 28 March client note titled “anatomy of a boom” the bank’s analysts said their earlier predictions of a speedy recovery were being borne out by the early data coming out of the US.

“The post-vaccine reopening of the economy is barely underway, but our expectation of accelerating sequential growth is transitioning from forecast to fact,” the note from Goldman Sachs’ senior economist Spencer Hill said.

The analysts said credit card data is consistent with a mid-single digit gain in March retail sales and the bank predicted that consumer spending was likely to be even higher due to $240bn in stimulus payments to consumers on the week of 17 March.

Other data also indicated a “stimulus and reopening-driven spending surge” the note said.

The analysts also pointed to increased airport usage and a jump in restaurant bookings as evidence of a speedy economic rebound.

US purchasing managing index data was also positive, with the latest data outperforming all 25 “sudden stop” episodes in Goldman’s international sample, even the four “V-shaped recoveries” that saw GDP return to the pre-crisis peak within a year.

The bank adjusted its real consumption growth forecasts to +9.5% in the first quarter, +12.5% in the second quarter and +7% in the third quarter, up from +8.5%, +10% and +10% previously.

Goldman also said the uneven economic recovery in different sectors to date was good news for 2021’s growth outlook as it increased the “scope for outsized gains in underperforming sectors”.

The US sent out a third round of $1,400 stimulus cheques on the week of 17 March after President Joe Biden signed the country’s $1.9tn Covid-19 relief package into law on 11 March.

The latest stimulus cheques consist of $1,400 per household member and come on top of a $600 stimulus cheque approved in December.