The economic ramifications of the pandemic may have panned out already as the US and other economies are planning an exit strategy from the lockdown, it has said.
Goldman Sachs expects total disposable personal income in the US to grow this year despite more than 30 million Americans filing jobless claims over the last six weeks.
In the wake of economic shutdown across the country, the unemployment rate could hit 15 percent, reported Business Insider, citing a note from the investment bank but the massive stimulus provided by the US Federal Bank may offset much of that lost income.
In the end, the total disposable personal income will increase by 0.5 percent or $75 billion in 2020, Goldman said.
"Combining our forecasts of labour income, corporate dividends, proprietors' income, interest, rental income, and tax cuts and government payments to individuals, we project that total disposable personal income will increase by 0.5 percent in 2020 relative to the pre-virus level, or $75 billion," it said.
Even though the reduced income has impacted hotel and restaurant businesses the most, the reduced business-to-business spending from the shutdown has had a cascading effect on other sectors, the investment banker said.
"Most waiters who lose their jobs will be made whole by unemployment insurance, but most lawyers who lose their jobs will not," it added, illustrating the brutal effect of income losses on such sectors.
In the same note, Goldman also said that the economic ramifications of the pandemic may have panned out already as the US and other economies are planning an exit strategy from the lockdowns.
Depending on the timeframe, the investment bank expects a V-shaped or a U-shaped economic recovery in the US.
"We expect GDP to grow ... as firms and households learn to combine higher economic activity with continued virus control via a range of adjustment mechanisms including mask and glove-wearing, frequent cleanings of workplaces, lower office and retail occupancy, and improved testing and contact tracing," Goldman said.First Anniversary Offer: Subscribe to Moneycontrol PRO’s annual plan for ₹1/- per day for the first year and claim exclusive benefits worth ₹20,000. Coupon code: PRO365
