- The US economy could expand 4.6% in 2021 on the back of huge fiscal spending by President-elect Joe Biden's administration, according to a note from Ned Davis Research.
- The successful distribution of a COVID-19 vaccine will serve as a tailwind throughout 2021, but investors should prepare for a weak first half of growth followed by a strong second half, NDR said.
- Other tailwinds that will support a strong US economy in 2021 include an accommodative Fed, housing market strength, and a weaker US dollar, the note said.
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President-elect Joe Biden's multi-trillion dollar stimulus plan will spur a surge in economic growth next year, according to a Wednesday note from Ned Davis Research.
NDR estimates US real GDP will increase by 4.6% in 2021, in a recovery that will be marked by a slow start in the first half of next year, followed by a strong second half.
"We expect a significant boost from fresh fiscal spending and account for above-trend growth early in expansions," NDR said.
Total spending could be as much as a $5.4 trillion increase over the next decade in areas like infrastructure, clean energy, manufacturing, education, and healthcare, according to Biden's plan, while an increase in taxes on high-income earners and corporations will raise $3.4 trillion in 10 years.
"Most of Biden's spending priorities have high output multipliers between 0.4 and 2.2, which means that every dollar of government spending generates between $0.40 and $2.20 of output," NDR explained.
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